Around the world, many countries have now taken a step to recognize blockchain technology as a legal financial asset. And the UAE is also one of them.
Today, the world’s first “cold storage” vault for cryptocurrencies is operating in Dubai, since it has actively accepting the crypto on global levels.
The UAE Security and Commodities Authority (SCA) has also come up with Crypto Asset Activities Regulations (CAAR) to regulate the main aspects of crypto-currency usage and created a Virtual Asset Regulatory Authority to hold virtual assets.
Some other institutions enjoy equal regulatory power over the financial and capital markets. Saying that- the Dubai Financial Services Authority formed Dubai International Finance Centre for the same. Though, in this article, you will get a clear understanding of how the crypto assets regulations in the UAE.
Also, Abu Dhabi Global Markets Financial Services Regulatory Authority (FSRA) created certain regulations in the year 2020. Followed by the year 2022, there were further developments for the same.
So basically, the ADGM and DIFC are the two main financial free zones in the United Arab Emirates (UAE) to manage crypto judiciary in the UAE.
Crypto Investment Regulations In The UAE-
In 2020, the SCA body instigated federal laws to regulate crypto assets. Under this, the Crypto Asset Activities Regulations (CAAR) was formed to operate crypto assets’ issuing, offering, listing, and trading onshore in the UAE.
The CAAR shows the criteria that participants need to fulfill before investing or trading in Crypto assets. Notably, the other digital assets, virtual assets, and fiatcurrencies regulated by the Central Bank of the UAE are not under the regulatory of CAAR.
Also, CBUAE hadn’t licensed the crypto assets as legal tender (at least not yet). However, the CBUAE has also implicitly stated that investing in crypto assets is not illegal in the UAE. Thus the citizens are trading in crypto assets without any legal issues.
Moreover, the UAE is provideing a more favorable environment for its digital asset industry growth as per the current marketing trend. And compared to many other countries- they have a relaxing regulatory approach toward crypto.
This is also the reason many cryptocurrency firms show interest in moving their business to the UAE. It is becoming one of the most profitable countries because of the growth in crypto industry.
Abu Dhabi Global Market (ADGM) Crypto Assets Regulations-
The Financial Services Regulatory Authority (FSRA) has published its own guiding principles for the virtual assets regulations (that include crypto as well). Although it favors the crypto industry while also committing to comply with international standards in Anti Money Laundering and combating financial terrorism.
5 ADGM’s Principles
Basically, there were 5 principles published on the ADGM website. It goes with the titles –
- Internationally Recognized Regulatory Framework
- Dynamic and Market-Oriented Regulations
- Risk Focussed and Proportionate Approach
- Cooperation and Shared Opportunity
- Delivering High Standards of Quality & Service
As the title states, these principles focus on delivering a dynamic, creative, and secure framework. Apart from that, let us understand how ADGM’s regulatory functions.
On a look, the framework seems to be more likely to be based on English laws. There is an appointed regulatory body to ensure the independence of supervision over the functions of the Regulator, Registrar, and Courts within the economic zone.
As we know, with crypto assets the risk of money laundering and terrorism funding increases. So these principles control such actions by following the international Anti Money Laundering and Combating Financial Terrorism standards with the support of the judiciary and financial sector surveillance.
In March 2022, ADGM announced a paper about the companies that are allowed to facilitate Non-Fungible Asset trading in the UAE jurisdiction. After that, a few companies like Binance and Kraken became the first foreign companies that received regulatory approval to operate in the Abu Dhabi Global Market.
Dubai International Finance Centre Crypto Assets Regulations-
Within a few years only, Dubai has become a hub of evolving blockchain companies since it has crypto-friendly legislation. It applies to all virtual asset services (crypto services) throughout the Emirates of Dubai. These laws propose the legal definitions for digital assets by establishing a licensing regime and punishing companies that don’t follow that standard.
This new legislation provides more clarity to crypto traders and investors by requiring them to reveal their identities, thereby ensuring that no moneylaundering or terror funding activities are caused through virtual transactions. It also gave rise to the Dubai Virtual Assets Regulatory Authority to independently regulate the licensing of cryptocurrencies and other virtual assets. With cooperation with CBUAE, VARA has also established a secure financial system.
Virtual Assets Regulatory Authority (VARA)-
According to Dubai regulations, BTC, Crypto, and NFT, all come under virtual assets. The VARA, based out of the Dubai World Trade Center is the competent authority that regulates and oversees virtual assets.
Cryptocurrencies investments and trading also come under that. So before investing in any of the crypto assets, the user needs to check the regulatory standards created by VARA.
Also, the crypto asset platforms are subjected to these Virtual asset laws regulated by VARA. So, such platforms need to get a permit from VARA before operating. These platforms also need to get a commercial license from the regulatory authority in the Emirates. Many such platforms have a Virtual asset license from the VARA to operate their business in the Dubai World Trade Center free zone.
How To Invest In Crypto Assets In The UAE?
it’s natural for investors to associate with crypto investing and trading;. Compared to other countries, taxes in the UAE (Dubai Emirates) are avoidable to some extent. Thus it has become a hub for crypto investors and companies to make more money by moving into the UAE.
With such a flexible judiciary that allows crypto trading legally, crypto companies don’t pay hefty amounts as taxes to run their business in the UAE.
Both as an investor, and a business owner, people can make quite a profit compared to any other country. That is also the reason why the UAE economy is on an ever growing rise.
To start investing in cryptocurrencies in the UAE, here are the steps to follow:
Create Trading Account
First, the user needs a registered account from a licensed crypto broker agency in the UAE. There are many trading options with the number of crypto trading companies that got their trading license in the UAE, like Kraken, IQoptions, etc.
Deposit Fiat Assets
Once the user has a trading account, they are ready to deposit the amount. They can use bank transfers, credit cards, debit cards, or virtual transfers to do the transaction.
Invest In The Crypto Asset
It may take some time to get your money deposited in your trading account. When it’s done, the users are ready to invest in any crypto asset they want.
Store Crypto
After you purchase cryptocurrencies, the user needs to keep them safe protecting them from theft or loss. Crypto users store their assets in their eWallet, which is hardware or software based with a password option to secure purchased crypto assets.
Current Trends In Crypto Trading
According to the latest news, the DFSA has created a regulatory framework for managing cryptocurrencies operating in Dubai International Finance Center.
Though investing and trading in crypto assets is not illegal. However, DFSA clearly mentioned that it doesn’t consider cryptocurrencies as legal tender. But it still seems like the DFSA is also interested in working with businesses operating cryptocurrencies.
Presently, Bitcoin is the most popular crypto asset in the UAE. There are other popular blockchain coins like Ethereum, Ripple, Litecoin, etc. To start with trading, there are multiple options with crypto trading. Here are some in trend.
Day Trading
In this type of trading, the trader buys and sells their crypto assets on the same day. As the crypto prices are highly volatile, this trading is also quite risky. However, it can also let you earn an instant profit.
Margin Trading
Under this, a trader can borrow capital from the broker to make an investment. There is a risk in this type of trading, as the trader may lose more money compared to what they invest.
Arbitrage
In this type of trading, the trader can take the advantage of the price difference between exchanges. For example, if a user is getting an exchange rate of crypto $100 and $110 in another exchange. In such a case, the trader can buy from the first and trade with the second to earn a $10 profit.
Like any other investment, expert crypto investors always advise users to make a long-term investment in crypto assets. With short-term investments, there are risks of losing more unless the trader is an expert on the crypto market fluctuations.
Future Of Crypto In The UAE
The CBUAE is quite supportive of crypto businesses, as they are also interested in blockchain technology. Recently, they announced that by 2026 they would also be launching a digital currency. With this step, they expect to boost their economy and bring themselves into the top 10 central banks around the world.
The Crypto assets regulations in the UAE seem more complicated and monitored by FRSA, SCA, and DFSA authorities. Crypto companies need to take a license from SCA or FRSA before starting their business in the UAE.
After going through this post, you received all the information about Crypto regulations and recent developments in the UAE.
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