The federal financial regulatory agency of the United Arab Emirates (UAE) has announced that it will start receiving licensing applications for firms that want to provide virtual asset services within the country.
The Securities and Commodities Authority (SCA) said in a press release that all virtual asset service providers (VASPs) operating in the country must submit an application and obtain a license from the regulator, with the exemption of those licensed in the country’s financial free zones.
Meanwhile, digital asset companies operating within the emirate of Dubai will still have to comply with its own financial regulator, the virtual asset services authority (VARA). These companies are also required to apply for and obtain a license from VARA.
On Dec. 11, the UAE’s Cabinet issued resolution number 111 of 2022, which regulates virtual assets in an attempt to provide an “attractive investment, economic and financial environment for global companies and institutions operating in the virtual assets sector.”
The SCA officially announced that it’s undertaking the tasks of regulating and supervising the virtual assets sector pursuant to the cabinet resolution on Feb. 1. According to the SCA, the resolution aims to “ensure the protection of investors’ funds in virtual assets from illegal practices.”
The SCA added that the resolution applies to all transactions related to virtual assets for investment purposes including the non-financial free zones in the country. However, the regulator also specified some limitations. They explained:
“Its provisions do not apply to virtual assets that are used for payment purposes, as they are subject to the jurisdiction of the Central Bank. They also do not apply to financial free zones.”
On Jan. 13, UAE-based blockchain lawyer Irina Heaver spoke with Cointelegraph to explain the implications of the new federal virtual asset law. According to Heaver, failure to comply with the new law could result in financial fines of up to 10 million AED ($2.7 million), disgorgement of profits and criminal investigation by the public prosecutor.