Key Insights
- Dubai wants crypto companies and investors to establish themselves in the city.
- The VARA framework seems ambiguous and not ready for investors to see what it contains.
- Experts say if Dubai wants to woo investors, it should make the regulatory framework friendly and release it as soon as possible.
Crypto investors find Dubai, the most populous city in the United Arab Emirates, a haven. On this premise, the Government is heavily recruiting crypto companies to establish themselves.
In Dubai, the Virtual Assets Regulatory Authority (VARA) is responsible for the regulatory framework of the cryptocurrency industry. Similarly, VARA is a full-fledged regulator tasked with governing, regulating, and licensing cryptocurrencies, NFTs, and other virtual assets.
However, since its establishment in February 2022, the Virtual Assets Regulatory Authority has not released a regulatory framework.
Experts say the city would have gone beyond this level in crypto adoption if the VARA regulations were clear. Therefore, the Government has assured local companies and investors— the regulatory framework will be ready before the end of the year.
Dubai Seeks Crypto Companies
Experts say Dubai is in a dilemma— the Government is showing readiness to host crypto companies and create a thriving environment for them. However, the main regulatory framework governing their activities is not ready.
The city prides itself as a center for business tourism. Additionally, Dubai charges low tax rates; its location is near talent hubs with the ease of obtaining working visas.
In one of its pursuits to woo crypto companies, Dubai is making a play to welcome the crypto industry. It intends to become a top metaverse economy and create 40,000 virtual jobs.
You would recall that the Financial action task force, a Paris-based financial watchdog has UAE on its gray list. The country is beefing up its anti-money laundering regime and increasing monitoring of the virtual asset industry. These acts are geared toward getting the UAE off the gray list.
Furthermore, the Virtual Assets Regulatory Authority (VARA) has given licenses to some crypto exchanges. For instance, in September, VARA handed the minimum viable product (MVP) license to Binance.
VARA officials said the license allows exchanges to offer a “full suite” of services, including spot, leverage, and futures. However, the license excludes the exchange from offering services such as crypto loans.
Conclusion
Experts and industry players say the Dubai Government is the first to regulate crypto under a new regulatory body— solely for crypto. They said several countries have attempted to fit virtual assets into traditional regulatory models. However, they applaud the move by Dubai to do it differently.
Similarly, Dubai’s decision to encourage and actively court crypto companies is laudable. However, the regulatory framework seems tough and must be well implemented to achieve desired results.
