Dubai announces policy on virtual assets and bans some cryptos 

  • Dubai regulators released new rules and regulations for virtual assets.
  • VARA banned some anonymous cryptocurrencies. 
  • Last year DMCC registered around 3049 crypto startup firms which later increased.

Interest in cryptocurrencies is buzzing globally. But where there is profit, there is loss also. As you already know, what happened in the crypto ecosystem last year? The FTX collapse has been an alarm for crypto regulators to tighten the screws of crypto regulations. Many countries have taken steps to enact crypto regulations so that investors and the firm will not be at a loss.

On February 07, 2023, the United Arab Emirates (UAE) Dubai’s Virtual Assets Regulatory Authority (VARA) released crypto assets-related regulatory guidelines. The report shows that VARA has banned anonymous cryptocurrencies like Monero (XMR) and Zcash (ZEC).  

The rules released by UAE’s VARA also define the basic principles and aims of virtual assets issuance, giving license to cryptocurrencies, anti-money laundering/terrorist financing blockage, marketing and promotion and many others. 

Fundamental principles and goals of VARA

The guidelines come with basic principles for the effective regulation of virtual assets and activities related to them:

  • Market Integrity and Stability– According to VARA guidelines, the market must be fair, orderly, and transparent and prevent fraud and other criminal activities. The market should be systematically hedged with consideration for prudential risks. Markets can be volatile while still being considered fair and orderly. 
  • Consumer Protection- Governance seeks to prevent losses arising from misinformation, abuse or poor operating practices. Market participants are free to assume risk as long as they have given “informed consent” regarding their investments. The VASP has provided them with all details mandatory for such an agreement in granting with all applicable laws and regulations.
  • Technology neutrality and supportive innovation- Governance should not discriminate against technology but instead should be against illegal or unhealthy activities. If an activity is not illegal, it should be possible and desirable to regulate it without completely banning it.
  • Regulatory resilience- Given the fast-paced nature of the industry, governance should not quickly become out of date with loopholes. Governance is principle-driven, and VARA takes care of instructional carve-outs.
  • Regulatory efficiency and proportionality- Implement a regime that is not only effective [i.e., achieves the policy intent] but also feasible in the least troublesome manner for both VARA and VASP. Any trouble imposed is reasonable relative to the potential harm being diminished.

The VARA clearly said that all corporations which are working with digital assets and traders investing $250 million or more in cryptocurrencies must be listed with VARA. If bankruptcy or a breach of directions is confirmed, the regulator can revoke the license and set fines ranging from 40,000 dirhams to 200,000 dirhams ($10,890-$54,450).

According to the news source, Dubai Multi Commodities (DMCC) registered 3049 crypto startup companies last year, which became a record; later on, the total number increased to 22,000. 

What do you think the rules and regulations announced by VARA for virtual assets will be really helpful for investors as well as crypto organizations. It will be interesting to see whether it will be easier for crypto firms to comply with the rules.



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