Dubai’s new law on virtual assets is intended to provide an appropriate regulatory framework for companies that deal with cryptocurrency in various formats, including def projects, security tokens, or NFTs, a renowned expert said.
Dubai’s brand-new virtual assets regulation law – as well as the new virtual assets regulation authority (VARA) that was established to supervise, regulate and oversee virtual asset services, will likely increase investment by firms already involved in the cryptocurrency industry from an institutional point of view an expert has told Arabian Business.
As ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum launched the Dubai Virtual Asset Regulatory Authority (VARA), which will establish the guidelines and rules which govern the operation of virtual assets-related activities, which include clearing, management, and settlement services and will also define the classification of different types that constitute virtual assets.
Sharing his reactions, the partner and head of TMT, FinTech, and Cyber at BSA Ahmad Bin Hezeem & Associates LLP, Nadim Bardawil, said: “We do see an increase in investment locally by companies already in the cryptocurrency industry, such as service providers, intermediaries, and issuers of cryptocurrency-related financial products.”
The law is designed to create a regulatory framework for those who deal with cryptocurrencies in different formats such as def projects, security tokens, or NFTs.
The week before, Arabian Business reported that the world’s most renowned technology for blockchains and crypto company, Binance, had been granted the Virtual Asset License to function in Dubai’s test-adapt-scale virtual asset market to serve as a basis to expand into other regions.
Through the approval, Binance will be permitted to provide limited exchange services and services to pre-qualified investors and professional financial service providers. Binance will also be able to create an infrastructure for blockchain technology in Dubai’s Dubai World Trade Centre, nurture young talent, and create an exciting blockchain-based ecosystem.
Bardawil stated: “It is important to be aware that the new law on virtual assets does not mean that cryptocurrencies are regulated in their own right because many of them are not subject to the rules of regulation by an uncentralized regulator.
“Rather, it will establish a framework that allows companies in the crypto sector to conduct business from and within Dubai and still hold the required license.”
Discussing the impact this could affect the real estate industry, He added: “We would be looking for a widespread adoption of crypto as a payment method for real property assets in Dubai to make significant effects on the real estate market.”
In addition, about the forex trading of virtual assets, the new regulation is expected to encourage and stimulate development in the field.
“We are witnessing the local retail and institutional investors becoming more comfortable using virtual currency. The UAE has an impressive rate of investing in cryptocurrencies worldwide. Two major factors contribute to the reason: (1) an innovative and adaptable regulatory strategy and (2) the global and educated populace.” Bardawil added.
The Dubai virtual assets law was enacted on the same day as the brand new US Executive Order that sets the rules for cryptocurrencies.
In a statement on the timing, Bardawil said: “Dubai and the UAE continue to keep track with global markets in terms of regulation in this field.
“Investors ought to find this positive given the past resistance of the US to issue any specific regulation aside from laws that are issued by states, and obviously, they see Dubai as a constant continuous effort to remain on the cutting edge of the latest technology.”