Crypto firms wishing to operate in the United Arab Emirates can now apply for a license from the Securities and Commodities Authority.
Under the new licensing regime, approved by the SCA’s board of directors, firms must comply with codes of business conduct, including integrity, transparency, the protection of consumer assets, and limiting the trading of certain products to specific customers.
Securities and Commodities Authority Requires Minimum Capital Reserves
Article (5) of the new regulation defines digital asset business activities requiring a license, including brokerage, custody, platform operation, and virtual asset service providers.
Article (6) gives the SCA power to request additional documents from crypto companies. At the same time, Article (7) imposes minimum capital requirements, requiring firms to comply with the Financial Action Task Force’s anti-money laundering guidelines. The UAE is currently on FATF’s gray list, subjecting it to greater monitoring.
The SCA licensing requirements apply to all emirates in the UAE except economic free zones and Dubai. It grants local financial centers like Abu Dhabi freedom in day-to-day licensing processes. Crypto firms operating in Dubai must register with the Virtual Assets Regulatory Authority (VARA).
UAE Supreme Council Member Sheikh Saud bin Saqr Al Qasimi recently established a free zone dedicated to digital assets.
The region, the Ras Al Khaimah Digital Assets Oasis, is linked with the UAE’s recently-established Department of the Future. It will open in Q2 2023, inviting metaverse, blockchain, NFT, DAO, and other Web 3 firms.
The SCA will partner with the central bank to enforce the new regulations, which came into effect on Jan. 15, 2023. The UAE Cabinet’s Decision No. (111) of 2022, issued at the end of last year, informed the SCA requirements.
Binance Launch Delayed as VARA Clamps Down
VARA recently tightened its requirements for crypto firms seeking a license in Dubai. It probed Binance, the world’s largest exchange, for more information on its corporate structure and financial processes.
Earlier this month, Binance delayed plans to offer trading through its Binance FZE entity for operational reasons.
Bybit recently moved its headquarters to the Dubai World Trade Center after securing in-principle approval from VARA last year.
Other firms with Dubai licenses include Komainu, Hex Trust, and Crypto.com. However, Hex Trust held an Operational MVP license and was required to provide similar information, which it claimed posed no major hurdles to getting a license.
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