How the UAE enables the adoption of the virtual asset economy and cryptocurrency
Traditional finance and the virtual asset economy have become increasingly intertwined since the widespread global adoption of cryptocurrency and blockchain.
The UAE is a global leader in the financial industry and has progressively been on the forefront of new technology, including blockchain and cryptocurrency.
By developing a robust cryptocurrency infrastructure and regulatory framework, the country is now looking to attract more crypto-related businesses and projects to its shores by establishing itself as a global hub for the industry.
The number of crypto businesses looking to setup in the UAE has seen a massive surge in the past year, capitalisation of which is estimated at AED 265 billion.
The UAE is a pioneer in setting regulations and compliance standards in crypto and blockchain. The Securities Commodities Authority, Abu Dhabi Global Market (ADGM), and Free Zone authorities have specific rules that must be followed. For all crypto-related ventures such as representative offices, data mining firms, and consultancies, the Virtual Assets Regulatory Authority (VARA) has been introduced as a regulatory framework, except for businesses in DIFC. It is the ruling authority to determine the legality of the set up.
Business activities in the crypto scope within the digital asset framework are:
-Proprietary trading in crypto commodities
-Operating crypto assets – adviser, broker
-Metaverse service provider
-Non-fungible token (NFT) marketplace
-Distributed ledger technology services
Freezone Setup Options
It is mandatory to incorporate all crypto assets with UAE free zone departments that are approved by the government, listed below:
Dubai Multi-Commodities Centre (DMCC)
Obtaining a licence from this freezone lets you conduct activities such as trading currencies, storing crypto assets, cater to crypto-related services, developing and managing new crypto software, and business consulting services.
Abu Dhabi Global Market (ADGM)
ADGM is another freezone with a special legal status to operate crypto businesses. It is the first jurisdiction globally to develop and implement a comprehensive virtual asset regulatory framework, combined with the regulations of the Financial Services Regulatory Authority (FSRA).
Dubai World Trade Centre (DWTC)
DWTC was among the first freezones that announced the issuance of crypto-related licences under supervision of Securities and Commodities Authority (SCA).
Dubai Airport Freezone Authority (DAFZA)
DAFZA provides a robust framework for providing licenses to regulate crypto businesses and has signed an agreement with the Securities and Commodities Authority (SCA). Companies with a crypto license issued by DAFZA can provide services to international investors and perform various activities with their crypto assets.
Basis for licence non-approval
-A crypto wallet record with fraudulent transactions or illicit activities
– Any criminal activity associated with the founders
– Insufficient operational capital for at least 6-12 months
– An inadequate business plan
How to establish your cryptocurrency business in the UAE
As the GCC’s leading market entry and company formation specialists, the team at CBD will ensure the seamless incorporation of your crypto business while following international best practices and compliance guidelines. Find out more about Dubai visas, Dubai company formation and PRO services UAE.
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