The UAE is poised to emerge as the first choice for global companies in the digital asset business for their global expansion, following the Gulf country approving a new regulation to govern virtual assets in the country, sector experts said.
The new regulatory framework is also expected to fuel the mainstream adoption of blockchain applications for economic growth in the region.
Several global and regional companies in the blockchain, crypto and NFT (non-fungible token) segments are hurriedly finalising plans to enter or expand their operations in the country in the next few months, industry insiders said.
The UAE Cabinet this week introduced a new regulation and an independent regulatory authority for virtual assets and virtual asset service providers – a move which marks the state’s first regulatory regime for the sector at the federal level.
The Dubai Virtual Asset Regulation Law and the Dubai Virtual Assets Regulatory Authority (VARA) would oversee the growth of the virtual asset business environment including regulation, governance and licensing.
The new regulation is expected to come into effect on 15 January 2023.
“We are delighted to see the UAE moving towards a more mature regulatory framework for the digital asset industry. The advanced regulations at the federal level will make UAE the first choice for global companies in the digital asset business for their global expansion,” Mahin Gupta, founder of Liminal, a Singapore-based digital wallet infrastructure platform with operations in UAE, told Arabian Business.
The latest regulatory framework will facilitate the efforts of the authorities to create a compliant and progressive regime in the UAE for global crypto companies to build compliant blockchain applications to fuel mainstream adoption and economic growth in the region,” Gupta said.
Gupta also revealed the company’s plans for an aggressive expansion in the UAE in the wake of the latest government moves to further develop the sector.
“At Liminal, we are constantly working towards strengthening our presence in the UAE and adjourning areas through like-minded partners. We will now explore UAE as a market with huge business potential for technology-led secure services in the field of crypto and blockchain [following the new regulatory environment]” he said.
Industry experts said UAE authorities’ decision to establish a new regulatory environment for the sector assumes added significance in view of the recent global upheaval in the industry following the FTX collapse and will encourage more companies to set up base in the UAE.
“The new federal regulation provides more clarity to the sector and visibility around how the federal and local – ADGM and DIFC – regulations interact with each other,” Padmini Gupta, co-founder and chief executive officer of Xare, a Dubai-based fintech, told Arabian Business.
“This will encourage more companies and founders to choose the UAE as their base in building the future of digital assets and metaverse,” Gupta said.
The latest data released by the Dubai Multi Commodities Centre (DMCC) shows out of 3,049 new businesses registered in Dubai in 2022, more than 500 businesses were crypto startups.
“The data speaks volumes about Dubai, emerging as a global hub for crypto-related products and services,” Mahin Gupta said.
The new UAE regulatory framework is designed to both protect investors and supervise the industry, apparently having recognised the perceived risks posed to investors in virtual assets.
The UAE Cabinet also said that the regulation would support the efforts of the state to provide an attractive investment economic and financial environment for international companies and institutions operating in the virtual assets sector to provide their services in the state.
The businesses that fall under the purview of the new law include cryptocurrency exchanges, businesses facilitating cryptocurrency transfers and the like.
However, the government-owned DIFC financial-free zone will reportedly be exempted from this regulation. This is because the Dubai Financial Services Authority (DFSA) is developing its regulations for the virtual asset market to be applied in DIFC.
Source:https://www.arabianbusiness.com/industries/technology/uaes-new-law-for-virtual-assets-sector-to-trigger-mass-entry-of-global-companies