Securities of the United Arab Emirates Organizer It announced that it is now accepting license applications from companies keen to provide cryptocurrency services within the country. According to a press release issued on April 17, the UAE is more active in regulating digital currencies within its borders.
It is now mandatory for crypto companies wishing to operate in the UAE to obtain a license from the Securities and Commodities Authority (SCA). The Securities and Commodities Authority directed all Virtual Asset Service Providers (VASPs) in the country, except for those already licensed in the UAE financial free zones, to apply for approval.
In the wake of the UAE Cabinet’s decision the previous year to regulate the cryptocurrency sector, the Securities and Commodities Authority recently endorsed this licensing regime. Since the beginning of this year, the Securities and Commodities Authority has been tasked with regulating the sector.
To be authorized by the regulator, Virtual Asset Service Providers (VASPs) must demonstrate “operational competence and flexibility” and meet specific operational criteria.
Dubai and Abu Dhabi, among other emirates, have established licensing frameworks for cryptocurrency companies, and the recently introduced Dubai system has been supported by the local industry.
Other details about the encryption license
The Securities and Commodities Authority clarified that crypto firms operating in Dubai, which established their licensing framework last year, must obtain approval from the country’s securities regulator and a license from the Dubai Virtual Assets Regulatory Authority (VARA).
The new regulation defines the commercial activities of digital assets that require a license, which include brokerage, custody, platform operation and virtual asset service providers, as specified in Article (5).
The new regulation gives the Securities and Commodities Authority (SCA) the power to request supplemental documents from crypto firms under Section 6. Along with this provision, Article 7 stipulates minimum capital requirements for companies, which must comply with the Financial Action Task Force’s (FATF) anti-money laundering guidelines.
The UAE, which is currently on the Financial Action Task Force’s gray list, faces increasing scrutiny, making it imperative for cryptocurrency companies to uphold high standards of transparency and accountability.
According to the recent announcement, there are plans to amend the Virtual Asset Rulebook in 2022. This update to the legislation will see the inclusion of financial activities such as brokerage and custody of virtual assets.
A new class of virtual asset service providers will also be added to the rule book. The move signals the country’s commitment to regulating the fast-growing cryptocurrency sector in the UAE, which has recently seen a huge surge of interest.
The Securities and Commodities Authority assumed regulation and oversight of the cryptocurrency sector in February, with a focus on protecting investors’ funds in virtual assets from illegal practices. The Securities and Commodities Authority will also oversee investment-related virtual asset transactions, while the UAE Central Bank will regulate the cryptocurrency used for payments.
Featured image from Hindustan Times, chart from TradingView.com
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