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Features of crypto regulation in the United Arab Emirates

The United Arab Emirates is leading in the field of the crypto industry. The state is loyal to this activity and has transparent legislation, so the number of companies wanting to obtain a crypto license in UAE is growing. Every year, the number of investors who wish to invest their capital in virtual currency in the country is increasing, thanks to the precise regulation of the business in this jurisdiction, which ensures legality and reliability.

Basic requirements

The country has developed regulations for organizations involved in business activities. Before you start your financial activities related to digital currency, you need to fulfill several conditions:

engage in business exclusively within the framework of the current regulatory and legal framework;
the company must have the start-up capital required to run the business for half a year or a year;
apply the AML program, which is aimed at combating illegal financial activities (money laundering);
create a database that will be freely available to regulators.

After the company chooses the direction of activity in digital currency, it sends an application for one of two types of permits.

Types of permits

Before the start of the functioning of the organization, you need to be permitted at a specialized financial center. This organization issues two types of permits, namely:

A permit intended solely for the sale and purchase of digital currency through distributed ledger system and other activities with crypto is prohibited;
A permit gives the right to various services, such as conducting transactions, mediation, processing payments, and providing storage for digital coins, but buying or selling virtual currency is impossible.

From this, it follows that in this country, crypto activities are divided into specific areas in the financial field of business, which are prohibited from violating.

Main Requirements

The Financial Center and the Securities Authority have entered into a contractual relationship, which provides for developing a regulatory framework for organizations engaged in the business.

An organization planning to conduct activities related to virtual assets must follow specific requirements:

submit documents confirming their financial reserve required for the firm’s activities for 6-12 months;
comply with regulatory requirements KYC;
adhere to the legislative policy of AML – which means to prevent and detect illegal financial transactions with virtual currency;
for regulatory structures to have free access to company information and employees’ data;
be permitted by one of the types of licenses: purchase/sale of digital coins or services.

If at least one of the above points is not met, then even with a permit, the company will not be allowed to operate.

Crypto business legislation

Currently, state control includes the following items:

regulatory and legal documents;
regulation in economic centers (DIFC and ADGM);
the law of control of the business.

Next, we will consider in more detail based on what legal documents the activities of organizations are regulated.

Government regulators include the SCA and the Central Bank. SCA controls the work of companies based on the “Decision on the control of crypto assets.” The regulatory document includes activities related only to the purchase and sale of virtual currency. The Central Bank controls actions based on the “Regulation on Payment Systems” approved by it, which includes the licensing process, and on the “Regulation on Payment Services,” which refers to making payments using a virtual currency with the characteristics of fiat money.

The FSRA and DFSA organizations carry out financial control based on several existing Regulations – activities with virtual assets, e-securities, and the placement of such investments and securities. In addition, the “Law on the Regulation of virtual assets” was signed in Dubai. This law provides for the creation of the VARA Regulator, which is also responsible for the licensing of firms.

Thus, the legal regulation in the United Arab Emirates has a large set of different types of control over the activities of companies.

Conclusion

By conducting business in this jurisdiction, the company can legally do business, following the approved legal documents and the regulatory authorities, ensuring that all conditions and requirements are met.

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