How to get virtual assets license in Dubai?
Technology change has the potential to stimulate financial innovation and efficiency, as well as improve financial inclusion, but it also opens up new avenues for criminals and terrorists to launder their gains and fund their illicit activities. The emergence of Virtual Assets (VAs), which are a type of decentralized digital money or token, has been one of the most significant technological advancements in the recent decade.
What are virtual assets?
A virtual asset is a digital representation of value that can be digitally traded, or transferred, and can be used for payment or investment purposes. The most popular digital assets are cryptocurrencies and non-fungible tokens (NFTs). Virtual assets do not include digital representations of fiat currencies, securities, and other financial assets that are already covered elsewhere in the FATF (The Financial Action Task Force) recommendations. The term ‘virtual asset’ refers to any digital representation of value that can be digitally traded, transferred, or used for payment. It does not include the digital representation of fiat currencies.
There are numerous advantages to using virtual assets. They have the potential to make payments easier, faster, and less expensive, as well as provide alternative payment methods for those who do not have access to traditional financial products.
Because this industry is still relatively new in most countries, purchasing and trading VAs carries several hazards, including extremely high volatility and potential use for money laundering, crime, and terror financing. Many virtual asset service providers are regarded as “risky businesses,” and are therefore refused access to bank accounts and other traditional financial services.
In most jurisdictions, virtual asset service providers are a nascent industry with considerable money laundering and terrorism funding threats.
How are virtual assets regulated in Dubai?
Cryptocurrency is becoming popular in UAE and there is a huge opportunity to explore the lines of cryptocurrency trading, storage, transactions, and a host of new business possibilities. All types of cryptocurrencies are available for trading in the online Crypto Exchanges in Dubai. Considering the numerous advantages of the DMCC zone, it distinguishes the proposal for its profitability and uniqueness. The license will legitimize the process of mining and trading cryptocurrency in the UAE and give an upgrade to the business.
The potential for the Virtual Asset market to flourish is enormous, given the growing popularity of Virtual Assets such as Cryptocurrencies and NFTs, as well as the increased significance of blockchain technology across a variety of sectors around the world.
A new authority named Dubai’s Virtual Asset Regulatory Authority (VARA) is established in March 2022. One of its objectives is to protect investors from fraudulent schemes that have been proliferating across various countries around the world. It also aims to protect consumers from being exposed to risks related to virtual asset trading platforms, such as money laundering and terrorist financing. The regulator was formed recently when Dubai approved its first law to regulate crypto assets. VARA would simplify regulatory application and operational licensing approvals for Virtual Assets, such as digital assets, goods, operators, and exchanges, allowing the DWTC Authority to become a new specialized zone for regulated Virtual Asset firms soon.
What are the requirements for virtual assets license in Dubai?
Any natural or legal person wishing to engage in virtual asset activities must first obtain authorization from VARA and then establish a business presence in Dubai. The Virtual Asset Law establishes a clear general restriction on engaging in any activity covered by VARA without prior authorization.
These activities are:
- the exchange between virtual assets and currencies, whether domestic or foreign;
- exchange between one or more forms of virtual assets;
- transfer of virtual assets; custody and management of virtual assets or control over them;
- virtual asset portfolio services;
- virtual offering and trading services are all examples of virtual asset platform operations and management services.
Any organization intending to engage in any of these activities must first acquire VARA clearance before obtaining a license.
How to get the license in Dubai?
The Virtual Assets Law requires that applicants must establish Dubai as their business’s headquarters and get a commercial business license from the competent licensing authority in Dubai to obtain a license.
The rules and judgments augmenting the Virtual Assets Law are intended to lay out the precise licensing process as well as additional ongoing obligations for anti-money laundering, disclosure, transparency, and know-your-customer (KYC) processes.
Bybit, a cryptocurrency exchange, has announced that its headquarters would be relocated from Singapore to Dubai. In addition, Crypto.com has stated that it will open a regional office in the city. Global crypto exchanges such as FTX and Binance had previously secured licenses to operate in the area,
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