Out-Law News 1 min. read
27 Apr 2022, 2:43 pm
The Abu Dhabi Global Market (ADGM) has licensed its first global virtual asset multilateral trading facility (MTF) as the region’s focus on virtual assets heats up.
Virtual assets exchange group Kraken has become the first global cryptocurrency exchange to receive a Financial Services Permission (FSP) licence from the ADGM. The licence means Kraken can operate a regulated virtual asset exchange platform in the ADGM to service the needs of the Middle East and North Africa region. The company will provide access to cryptoassets through regulated funding, trading and custodial services in dirhams. Kraken’s licence comes several years after the ADGM introduced a virtual assets regulatory framework in 2018.
Meanwhile, last month Dubai published a new law creating a new cryptoassets regulator for the emirate, the Virtual Assets Regulatory Authority (VARA), alongside other relevant provisions. Dubai Law No. 4 of 2022 on the Regulation of Virtual Assets in the Emirate of Dubai lays the foundations for creating a regulated ‘onshore’ industry for virtual assets in Dubai. VARA will have legal, financial and administrative autonomy and will be affiliated with the Dubai World Trade Centre (DWTC) Authority, one of the ‘free zones’ in the emirate. VARA will control the application and licensing process for virtual assets, including digital assets, products, operators and exchanges. The DWTC said the application process for regulated virtual asset business licences would be launched in the near future.
Associate, Pinsent Masons
The UAE has quickly become one of the most major crypto hubs in the world, and the establishment of VARA and development of the cryptoassets regulations are expected to attract more businesses operating in this space
The establishment of VARA means all virtual asset activity in Dubai will be regulated, and those wanting to carry out activity relating to virtual assets will have to be based in the emirate.
VARA will have the ability to restrict or suspend licences and activities, as well as issue fines for organisations or individuals violating its rules.
The provisions in the new law, which came into force on 11 March, apply throughout Dubai, including the majority of free zones and specialist development zones. It will not apply to the Dubai International Financial Centre (DIFC), which operates its own financial regulatory regime. Further guidance and regulations setting out the scope of VARA’s work and licensing procedures are expected to be published shortly.
Financial regulation expert Barkha Doshi of Pinsent Masons said: “The UAE has quickly become one of the most major crypto hubs in the world, and the establishment of VARA and development of the cryptoassets regulations are expected to attract more businesses operating in this space”.
“Innovation in the virtual assets industry is rapidly increasing, with regulators such as the ADGM stimulating further growth in the industry by developing one of the first comprehensive regulatory frameworks governing virtual assets, which acts as a springboard for what is set to be the next evolution in finance. The establishment of VARA demonstrates the UAE’s push to get ahead of the crowd, in addition to other work to keep pace with product innovation, market and technical developments,” she said.
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