UAE Plans to Issue National Crypto Licenses to Virtual Assets Service Providers

The United Arab Emirates (UAE), a country in the Middle East, has announced today that it is making preparations to give federal licenses to virtual assets service providers (VASPs) by the end of this quarter. A government official revealed the matter, as reported by Bloomberg media outlets. The move by the UAE is part of its efforts to attract cryptocurrency firms to the nation.

The government official said that the Securities and Commodities Authority (SCA), UAE’s financial regulator, is in the final phase of creating a framework that would enable VASPs to establish shops in the country.

The UAE considers a nationwide licensing system for virtual-asset companies as vital as this would help the country to better compete with rival financial centers such as Hong Kong and Singapore, which are also in the process of developing fully regulated environments for cryptocurrency trading.

After considering the different approaches of Singapore, the U.S. and the U.K, the UAE will apply a hybrid approach whereby the UAE central bank and the SCA will be responsible for regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term, while regional financial centers will be tasked with determining their day-to-day procedures on licenses.

Moreover, the government official disclosed that the UAE government intends to develop a favourable environment for cryptocurrency mining.

Reports show that some of the financial free zones in the country have already distributed permits to VASPs. Multi Commodities Centre has already issued 22 licenses. Abu Dhabi Global Market has issued 6 licenses while Dubai Silicon Oasis Authority has given at least 1 license.

Promoting Adoption of a Digital Currency Nationwide

In July 2021, the UAE announced plans to develop a central bank digital currency (CBDC) in a bid to join other countries such as the US, China, Japan, and Germany. Alongside the issuance of a CBDC, the UAE Central Bank (CBUAE) disclosed plans to promote digital transformation in the UAE’s financial services sector, strengthen financial inclusion through the use of digital IDs, the use of AI and promote the use of machine learning to improve monitoring.

While unregulated cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term are already popular in the country, the UAE stated that a government-issued digital currency could reduce the risks associated with crypto transactions and help the oil-rich nation continue the diversification of its economy.

Crypto coins are popular in the nation and there are a number of trading platforms in place. While the CBUAE does not accept cryptocurrencies as legal tender, it has no plan to completely ban them. Instead, the central bank wants to regulate the coins in order to bring the benefits of crypto while eliminating the high risks associated with them.

In September last year, the Securities and Commodities Authority (SCA) and the Dubai World Trade Centre Authority (DWTCA) agreed to support crypto trading. The two bodies signed an agreement to facilitate the regulation, offering, issuance, listing and trading of cryptocurrencies and related financial activities within DWTCA’s free zone.