As published on gulfnews.com, Friday 11 March, 2022.
The adoption of first law governing virtual assets and setting up of an exclusive regulator to oversee the sector by Government of Dubai has come at a time virtual assets are becoming an integral part of the UAE economy.
Dubai, a leading regional financial services hub has witnessed rapid growth of traditional financial services during the past two decades. In recent times, traditional finance and virtual asset economy are becoming increasingly intertwined as businesses are fast adopting digital/crypto currencies and non-fungible tokens (NFTs) in their day-today business transactions.
A virtual asset may take the form of any digitised token of value that could be traded, stored, transferred, or used for payments. They could make payments easier, faster, and cheaper; and provide alternative methods for those without access to regular financial products. But without proper regulation, they risk becoming a virtual safe haven for financial criminals.
Virtual asset transactions on public blockchains can be done pseudonymous and in some cases completely anonymous due to the nature of the blockchains that support the virtual assets. As the popularity of virtual assets continues to surge, additional scrutiny by regulators around the world has increasingly been focused on the risks related to crime, money laundering and terror financing.
Dubai’s new virtual assets regulation law and the regulatory authority covers the entire spectrum of virtual assets ranging from operating and managing virtual assets platforms services; Exchange services between virtual assets and currencies; Exchange services between one or more forms of virtual assets; Virtual asset transfer services; Virtual asset custody and management; Services related to the virtual asset portfolio and services related to the offering and trading of virtual tokens.
The UAE has been quick to accept and adopt digitisation of assets while recognising the inherent risks associated with the sector.
Thus, it has become imperative on authorities to regulate the sector in coordination with various on-shore and off-shore financial and market regulators in the country. Without a robust regulatory framework and ongoing oversight, the virtual asset industry will remain a source of significant risks.
The Dubai Virtual Asset Regulation Law along with other regulations governing virtual assets in the country are sure to protect interests of all stakeholders while positioning Dubai and the UAE as regional and global destinations for the virtual assets sector.