 | Get all the essential market news and expert opinions in one place with our daily newsletter. Receive a comprehensive recap of the day's top stories directly to your inbox. Sign up here! |
(Kitco News) - The Securities and Commodities Authority (SCA) of the United Arab Emirates (UAE) announced that it has begun accepting license applications from companies wishing to establish virtual asset-related businesses in the region.
This development comes after the SCA board of directors approved the move as part of an effort to transform the UAE into a blockchain hub for the Middle East.
The UAE Council of Ministers issued Decision No. 111 at the end of 2022 which designated the SCA as the agency responsible for issuing decisions regarding the regulation of virtual asset transactions and licensing for service providers and their “work mechanism.”
Following this decision by the SCA board of directors, all companies that provide virtual asset services in the UAE, aside from companies licensed in financial-free zones, are required to make their status official by submitting an application to obtain an operating license from the SCA. They are also required to obtain a license for the Dubai Virtual Asset Regulatory Authority (VARA).
According to Article 3 of the decision by the SCA, only virtual assets on the official list approved by the SCA are legally allowed to be traded in the UAE.
Article 4 defines the tasks of a virtual asset platform operator, including requirements on “integrity, transparency and professional behavior, the system and procedures for protecting and preserving virtual assets, measures, systems and procedures for discipline and commitment, rules and procedures for fair, orderly and effective trading, and organizing access to services through procedures that guarantee access for permitted persons.”
Article 5 lays out the obligations of virtual asset platforms, which include “operational efficiency and flexibility, providing operational rules, including setting and maintaining operational business rules, and meeting operational rules for a set of standards.”
The SCA will be able to request data and documentation from a virtual asset service provider at any time, and the provider will be given a reasonable amount of time to respond. All disciplinary decisions made by the SCA can be appealed by the service providers.
|
| The MENA region has a new blockchain association centered in Abu Dhabi |
Legislative amendments have also been made to the country’s virtual-asset rule book to help facilitate these changes. This includes the addition of new financial activities such as “the broker of virtual assets, the safe custody of virtual assets, the operator of the virtual asset platform, and providers of virtual asset services.”
Virtual asset providers have been given guidelines that set the standards that platform operators are required to abide by when evaluating and accepting any virtual assets for listing. All entities wishing to engage in virtual-asset-related activities in the UAE “shall have headquarters in the State to conduct his business, according to one of the legal forms approved by the local authorities concerned with commercial licenses," the regulation states.
Cryptocurrency adoption in the UAE has been ramping up over the past year as the MENA region is seen as one of the fastest-growing markets for digital assets. Last month, the Central Bank of the United Arab Emirates (CBUAE) announced that it had officially implemented its central bank digital currency (CBDC) strategy, which will ultimately lead to the creation of a digital dirham for domestic and cross-border payments.
