Lawyer explains new federal virtual asset law in the United Arab Emirates

The United Arab Emirates (UAE) Cabinet has decided to walk a caller instrumentality that governs virtual assets, mounting up the country's archetypal regulatory authorities for the cryptocurrency abstraction astatine the national level. 

Before the federal-level regulation, the UAE already introduced respective supervisory initiatives for integer assets successful fiscal escaped zones similar the Abu Dhabi Global Market (ADGM). Last year, Dubai besides established its ain crypto regulator called the Virtual Asset Regulatory Authority.

Irina Heaver, a UAE-based crypto and blockchain lawyer, explained that the determination has respective implications successful the space. According to Heaver, the caller instrumentality makes definite that entities that prosecute successful crypto activities indispensable unafraid a licence and support from the caller regulator. Non-compliance could pb to a hefty fine. She explained:

“Failure to comply leads to dense sanctions, specified arsenic a good of up to 10 cardinal AED ($2.7 million), disgorgement of profits and adjacent transgression probe by the nationalist prosecutor.” 

Heaver highlighted that the instrumentality is expected to travel into unit connected Jan. 14, and would necessitate crypto entrepreneurs operating successful the state to conform. “Every crypto and Web3 task operating successful the UAE volition person to operation a mode to comply with the caller national instrumentality and each of the existing laws,” she explained. 

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Meanwhile, contempt the minimum requirements for VASPs being attainable, the lawyer thinks that galore firms whitethorn person immoderate difficulties. “Those are really alternatively realistic. However, the signifier shows that astir crypto companies autumn abbreviated of adjacent basal requirements,” said Heaver.

Related: How does the FTX illness impact Dubai’s crypto ecosystem?

The crypto lawyer besides highlighted that the instrumentality has besides acceptable up minimum requirements for virtual plus work providers (VASPs). According to Heaver, each VASPs are required to comply with the authorities successful unit connected combating wealth laundering crimes, the financing of coercion and the financing of unlawful organizations. In addition, each ineligible entities that autumn into the VASP class volition person 3 months to accommodate and comply with the caller law. 

Regulated activities nether the caller law. Source: Irina Heaver

Despite the constitution of a caller instrumentality dedicated to protecting consumers, Heaver believes that it would beryllium hard to forestall FTX-like entities from attempting to perpetrate fraud. Despite its efforts, Dubai's VARA inactive antecedently gave FTX approvals before revoking it successful November. She noted: 

“From the grounds that emerged, FTX is simply a lawsuit of superior fraud of a level that volition look Madoff look similar an angel. Unfortunately, nary levels of laws tin support america from radical wanting to perpetrate crimes intentionally."

Overall, the lawyer believes that this caller improvement is bully for founders, investors and consumers wrong the UAE and that regulatory clarity gives the state the close ingredients to beryllium the “Web3 superior of the world.”