The crypto oasis: How the UAE became the Middle East’s digital asset champion
The United Arab Emirates is reportedly getting ready to start issuing federal licenses for virtual asset service providers (VASPs) by the end of the first quarter of 2022. The move is expected to become part of a complex regulatory framework that the Middle Eastern nation is looking to establish on its way to becoming one of the world’s most crypto-friendly jurisdictions. What could this trajectory look like for the UAE?
The UAE’s Securities and Commodities Authority (SCA) is reportedly finalizing rules that would allow digital asset firms to set up shop in the country. While working on the legislation, the SCA bore in mind both Financial Action Task Force guidelines and the current legislative developments in the United States, the United Kingdom and Singapore.
In what was described as a “hybrid approach,” the SCA will oversee the digital asset marketplace in a dialogue with the Central Bank of the United Arab Emirates without directly interfering with the daily licensing procedures of the financial institutions in the country’s key financial centers, such as Dubai and Abu Dhabi. The government also reportedly intends to create a regulated environment for crypto mining.
The United Arab Emirates is a federation consisting of seven emirates: Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain. Usually, the federal government has the final say over financial matters, and the two principal bodies that define financial regulation are the UAE Central Bank and the SCA. Still, the federation includes several free zones, which are granted a degree of autonomy when crafting financial rules.
In fact, there are already around 30 VASPs, operating in the country’s free zones. Dubai Multi Commodities Centre
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