TL;DR Breakdown
- The United Arab Emirates (UAE) is planning to give a federal crypto license to virtual asset service providers (VASPs),
- The UAE is set to become a crypto hub as part of the government’s plan to attract new investment as the regional economy heats up.
The United Arab Emirates is preparing to grant federal licenses to virtual asset service providers (VASPs). According to reports, the authorities plan to hand out the licenses by the end of this quarter in an effort to entice blockchain firms to establish operations in the country.
UAE crypto hybrid approach
The United Arab Emirate’s crypto license legislation may be the first of its kind in the country. However, different free zones in the country had implemented cryptocurrency rules as early as 2018. The Securities and Commodities Authority (SCA) is currently in the final phases of developing a framework. An official said that the planned framework would enable VASPs to operate in the country.
The shift is a great economic model for Dubai and other Middle Eastern nations that conduct substantial business with the UAE. A national crypto licensing law would assist UAE in becoming a major cryptocurrency hub.
According to the report, the agencies considered the Financial Action Task Force’s standards and existing bitcoin rules in the United States. It also looked at how other nations have handled things, notably the United Kingdom, France, and Singapore.
After considering these strategies, the UAE will adopt a hybrid model. The SCA and central bank will be in charge of governance and crypto-related regulations. Finally, financial centers around the world in business with the United Arab Emirates will set their daily licensing procedures.
Aside from the crypto license, the UAE government is also establishing and policing the crypto mining business.
Crypto industry growth in UAE and the Middle East
As reported by Cryptopolitan earlier, the UAE’s government wants to bring forth rules that would allow cryptocurrency and blockchain usage. The recently proposed crypto licensing and mining regulations might be another step toward that goal.
The Dubai World Trade Centre (DWTC) was designated as a comprehensive zone and cryptocurrency regulator in December 2021. That same month, Binance launched into the UAE market after signing an MOU with the DWTC.
In May 2020, the International Financial Center in Abu Dhabi, a financial center and free-trade zone, gave Matrix its first crypto exchange license. Three exchanges located at the facility were fully operational in November 2021.
In March 2021, the Dubai Multi Commodities Center, the UAE’s major free-trade zone, established a regulatory framework for cryptocurrency businesses. According to this legislation, it has licensed 22 firms as of now.
The Middle East must do more to ensure that crypto transactions are fully regulated, as shown by its long way to go. The UAE and Bahrain have already set an example for others to follow, now is the time for them to do so.
Cryptocurrency is more than an investment opportunity; it’s a protective shield against currency depreciation and financial crises.
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