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- Dubai’s Virtual Asset Regulator Authority (VARA) has rolled out guidelines for Virtual Asset Service Providers (VASP).
- This move marks the oil-rich middle east country’s first regulatory regime for the sector at the federal level.
Dubai’s Virtual Asset Regulator Authority (VARA) has rolled out guidelines for Virtual Asset Service Providers (VASP). The legal framework published on Tuesday primarily aims to protect crypto investors and design much-warranted international standards for industry governance.
In January, the United Arab Emirates (UAE) Cabinet introduced the regulatory framework and developed an independent regulatory authority for virtual assets and virtual asset service providers.
The Arabian regulator sets out four compulsory rulebooks that service providers must comply with to offer their services. The “Full Market Product Regulations” include guidelines that lay down the rules for compliance, risk management, market conduct, and other requirements.
Firms must obtain authorization, and relevant licenses, adhere to rulebooks for marketing, advertising, and promotions with hefty fines following any rule break.
The Virtual Asset Regulatory Authority (VARA), the regulator in charge of overseeing cryptocurrency laws within Dubai, has issued new guidelines for virtual asset service providers (VASPs) operating within the emirate#crypto pic.twitter.com/fyKsc2s93m
— Smashi (@smashitv_en) February 8, 2023
Violators will be fined between $5,500 and $55,000 for breaching these guidelines. If a business repeats the same violation within the year, it could see fines double as high as $135,000.
A Jan. 10, 2023, Dubai Multi Commodities Centre (DMCC) report reveals that the UAE attracted more than 500 crypto start-ups and over 3000 businesses in 2022.
Notably, UAE’s digital economy generates roughly AED $100 billion, or 4.3% of the country’s GDP, and it is touted to be a major destination for crypto firms.
Emmanuel Alamu, the global head of OTC, Rain said that “the FTX situation” was an eye-opener. It shone some light on the relative strengths of different regulators’ approaches.
The Dubai crypto market is resilient as the regulatory body and its executives try to figure out the right way to do things. It’s a very young market and will be hit last in case of economic challenges, however, there is a need to seek regulatory advice from nations that are thriving in crypto, especially since it is a market that is over-sensationalized
The stunning collapse of FTX was not solely caused by an absence of regulation. A deficit of oversight and enforcement of existing regulations was also an important contributing factor.
But if, as seems likely, jurisdictions that had introduced strict controls for crypto businesses have, in doing so, protected their citizens more effectively from losing money in one of the biggest disasters to ever hit the crypto ecosystem, then you can be sure that other regulators will be quick to follow suit.
