On Wednesday, Dubai’s ruler, Sheikh Mohammed Bin Rashid, announced that the emirate has passed its first law governing virtual assets and formed a regulator to regulate the sector.
As regional economic competition heats up, the United Arab Emirates, a federation of seven emirates and the region’s financial center, has been trying to develop virtual asset regulation in order to attract new forms of enterprise. Sheikh Mohammed bin Rashid Al Maktoum, UAE Prime Minister and Ruler of Dubai, made the announcement.
Sheikh Mohammed stated in a statement broadcast by state media that the Dubai Virtual Asset Regulation Law aims to promote Dubai and the UAE as a regional and global destination for the virtual assets sector.
According to him, the Dubai Virtual Assets Regulatory Authority would oversee the growth of the virtual asset business environment in terms of regulation, licencing, and governance.
Except for the state-owned financial free zone DIFC, the new law will apply across Dubai. The Dubai Financial Services Authority (DFSA), the DIFC’s regulator, is working on its own virtual asset legislation. The first section, which covers digital tokens, was released in October, and this week, the DFSA started a consultation on crypto token regulation, which includes crypto-currencies.
According to the consultation paper, the DFSA is proposing an “approved crypto token” approach similar to that of Abu Dhabi Global Marketplaces’ Financial Services Regulatory Authority and the Central Bank of Bahrain, with over 2,500 crypto tokens traded globally in mostly unregulated markets.
This means that anyone who wants to provide a financial service in connection with a crypto token or a crypto token derivative can only do so if the DFSA has approved it for usage in the DIFC, according to the statement.