On February 2022, the Government of Dubai, under the guidance of His Highness Sheikh Mohammed bin Rashid Al Maktoum, issued Law No. 4 of 2022 Regulating Virtual Assets in the Emirate of Dubai (“the Law”), with the objective of establishing a regulatory authority for Virtual Assets and authorizing activities relating to Virtual Assets within the Emirate of Dubai[1]. It must be noted that the applicability of the Law extends to all free zones and special development zones across the Emirate, but excludes the Dubai International Financial Centre[2].
The Law has established a public entity, affiliated with the Dubai World Trade Centre (“DWTC”) Authority, under the name of ‘Dubai Virtual Assets Regulatory Authority’ (“VARA”), which is authorized to govern virtual asset-related activities within Dubai. Some of VARA’s primary objectives include:
- Development of digital economy in Dubai;
- Attract investments and simultaneously encourage companies in the Virtual Asset industry to be based in Dubai;
- Develop the necessary regulations for the protection of Virtual Asset investors and dealers and work in coordination with the relevant stakeholders to curb illegal practices;
- Develop the necessary regulations, rules, and standards for Virtual Asset Platforms, Virtual Asset Service Providers, and all other matters in relation to Virtual Assets[3].
Furthermore, any person who wishes to engage in any Virtual Asset related activity (in accordance with Article 16 of the Law) must obtain a Permit from VARA and must be incorporated in Dubai in a legal form approved by the competent commercial license authority[4]. Under Article 16, the activities that require a permit from VARA are:
- Operation and management services of Virtual Asset Platforms;
- Exchange services between Virtual Assets and national or foreign currencies;
- Exchange services between one or more Virtual Assets;
- Transfer services of Virtual Assets;
- Safekeeping, management, or control services of Virtual Assets;
- Services related to Virtual Asset Wallets; and
- Offering and Trading services in Virtual Tokens[5].
With the Director General of the DWTC Authority given the power to issue further issue resolutions for the purpose of implementing the provisions of the Law, considering the fact that Virtual Assets are in the process of becoming a part of the mainstream economy, such resolutions can be expected in the near future. Dubai, through the issuance of this Law, has once again shown that it is prepared for the future and leading the industry when it comes to Virtual Assets.
[1] According to Article 2 of Dubai Law No. 4 of 2022, Virtual Asset means, “A digital representation of value that may be digitally traded, transferred, or used as an exchange or payment tool, or for investment purposes. This Law No. (4) of 2022 Regulating Virtual Assets in the Emirate of Dubai Page 3 of 16 includes Virtual Tokens, and any digital representation of any other value as determined by VARA.”
[2] Article 3 of Dubai Law No. 4 of 2022
[3] Article 5 of Dubai Law No. 4 of 2022
[4] According to Article 2 of Dubai Law No. 4 of 2022, a Permit means, “A document issued by VARA authorizing a Virtual Asset Service Provider to conduct the Activity, or authorizing a Person to conduct any activities, business, or services related to Virtual Assets as determined by VARA.”
[5] Article 16 of Dubai Law No. 4 of 2022
