Dubai introduces the competent authority in charge of regulating Virtual Assets
Updated: Oct 19
On 28 February 2022, the Dubai Government enacted Dubai Law No. 4/2022 Regulating Virtual Assets in the Emirate of Dubai (the “Regulation”). The Regulation aims to regulate all Virtual Assets in the Emirate and its related activities, and further establishes the entity charged with regulating and supervising all categories of Virtual Assets.
Pursuant to the Regulation, the Virtual Asset Regulatory Authority (the “VARA”) is an entity in charge of regulating, supervising, and overseeing Virtual Asset services and activities. VARA’s main objectives include the following:
Improving the Emirate’s position as a regional and global destination of Virtual Assets and related services;
Developing investment awareness in the Virtual Assets services and products’ sector;
Contributing to attracting investments and companies operating in the field of Virtual Assets to make the Emirate a centre of Virtual Assets business;
Providing the necessary systems for protecting investors and dealers in Virtual Assets, and working towards reduction of illegal practices in coordination with the competent authorities; and
Providing the systems, rules and standards necessary for regulating, supervising and controlling Virtual Asset Platform, Virtual Asset Service Providers and everything related to Virtual Assets.
What does “Virtual Assets” cover?
Virtual Assets are defined as a “digital” representation of value that may be digitally traded, transferred, or used as an exchange or payment tool, or for investment purposes. The Regulation reiterates the types of activities that require a permit from VARA, in order to carry out said activities in the Emirate of Dubai. Additionally, it provides for the violations and corresponding penalties for any contravention of the Virtual Assets regime in the Emirate.
In short, VARA is here to stay and nominated as the competent authority responsible for all aspects concerning Virtual Assets and their activities in the Emirate of Dubai. Part of its duties are such but not limited to preparing and implementing policy and plans related to Virtual Assets, supervising the issuance and offering of Virtual Assets and virtual tokens, participating and coordinating with local, federal or international authorities in regulating Virtual Assets, and any other duties as specified in the Regulation.
The issuance of this Regulation is a continuation of Dubai’s journey towards adopting and developing a robust ecosystem for Virtual Assets trading and contribution to the emerging financial technology industry and the need to balance the rapidly increasing Virtual Assets activities with protection of market participants and the wider investment community through implementation of stringent regulatory standards.