How to Start a Crypto Fund in Dubai (Proprietary Trading License)

The cryptocurrency industry’s explosive expansion has produced the perfect environment for setting up cryptocurrency funds. There are more and more of them every day, but many investors are still unaware of all of their benefits and possibilities Crypto funds act as a conduit between cryptocurrency traders and investors, intending to facilitate their financial success.

Crypto Fund in Dubai

Dubai, one of the most popular tourist and business destinations in the world, offers world-class attractions in addition to a unique and enviable cosmopolitan lifestyle. Thanks to its renowned skyscrapers and upscale real estate’s locations like Business Bay and Dubailand, Dubai has earned a reputation as the Middle East’s metropolis with the best infrastructure and standard of living. It continues to be among the safest cities in the world despite the enormous influx of tourists.

The region is well renowned for drawing in top talent from all over the world, and it is home to many Fortune 500 multinational firms that have found the prime location from which to serve the Middle East, Africa, and Indian markets. Due to its state-of-the-art infrastructure, extremely profitable assets, and top-notch regulatory environment, Dubai has grown to be one of the most sought-after investment destinations in the world. The city hopes to be the most visited location on Earth by 2025, so this is a wonderful time to invest.

With the recent rise in crypto adoption the UAE’s Securities and Commodities Authority (SCA) moved quickly to set up a framework that allows crypto businesses to operate in the Dubai Multi Commodities Centre (DMCC). In March 2021 the DMCC and the SCA signed an MoU that established a regulatory framework for businesses offering, issuing, listing, and trading crypto assets in DMCC.

For the establishment of the cryptocurrency business in Dubai, DMCC has created the necessary facilities, laws, and infrastructure. However, investors need to be aware of the requirements, steps, and restrictions for establishing a cryptocurrency firm in the DMCC free zone.

By establishing a cryptocurrency fund, you can draw the funding required to carry out your ideas. Opening a crypto fund is easier than opening other types of funds, and it’s a secure approach to accessing a certain market.

How to set up a crypto business in Dubai?

Getting a license is always the first step in starting any kind of business, therefore you should do it as soon as you decide to launch a cryptocurrency firm. DMCC currently issues two crypto licenses based on the nature of the business activities: a Crypto Trading License and Distributed Ledger Technology Services.

Crypto Trading License can only be requested before receiving permission from the free zone authorities. Similarly, a proprietary trading license has been granted by the DMCC. Your cryptocurrency company must have a minimum share capital of AED 50,000 and must not be involved in any other activities in order to obtain the license.

Offering database management solutions and auxiliary services based on distributed ledger technologies, including blockchain, are included in the Distributed Ledger Technology Services license.

Any business engaged in these activities is prohibited from engaging in currency or cryptocurrency trading, operating a cryptocurrency exchange, or offering brokerage or payment processing services, among other financial services.

Crypto-commodity proprietary trading is defined as including: “the trading (Proprietary Trading) of crypto-commodities created using applications of distributed ledger technology. The act of operating an exchange, offering brokerage services, financial services, banking services, payment processing services, or storage services are not included in this activity.”

What are the requirements for the Cryptocurrency License in Dubai?

Before you can apply for a cryptocurrency license in the UAE, you must first complete a certain qualifying standard that has been set forth by the UAE government for regulatory purposes:

• Crypto Assets must be incorporated with UAE financial free zone departments.

• Your capital resources and operational expenses must be visible for more than 6 to 12 months

• No deceitful activities are allowed and clean records are required

• Your information must be secured in a crypto wallet

• Copies of valid passports of your business members

• Commercial license form issued by DED

How to obtain a license?

To obtain a license, there are several steps to follow:

• Proof of sufficient capital to operate the business for at least 6 months successfully.

• A strict KYC Norm has to have adhered

• The investors must demonstrate strict compliance with the Anti-Money Laundering and Counter-Terrorism Financing Laws of the UAE

• Disclosure to Value-Added-tax, Anti-Money laundering, and other Government authorities on request must be fulfilled

• Secured information of client’s financial information — safeguarding against cybersecurity

Then your next step is to choose your legal structure — sole proprietorship, LLC Company (Limited Liability Company), the one-person company recognized by DED. Chose a company name and submit the crypto registration form to the DMCC authority. Include a copy of each shareholder’s passport photo and a thorough business plan along with the required minimum capital. Present a brief business plan and select an office space. Make the necessary payment to the relevant government which will grant you a cryptocurrency license. Within a week of the approval, they will offer the cryptocurrency license if everything with the application and formal company documentation checks out.

To establish a cryptocurrency fund, you will need:

• Credentials for a cryptocurrency wallet;
• platform;
• strategy or plan;
• description of the profit-sharing plan for investors.