Use of Cryptocurrency in the UAE

Let’s look at how cryptocurrency use is regulated in different jurisdictions of the UAE. We will examine the specifics of crypto industry regulation at the federal level and at the level of the Emirates of Dubai and Abu Dhabi.

Federal Regulation

At the federal level, there are laws regulating the work with virtual assets across all Emirates.

Laws

• The SCA Virtual Asset Regulation
• Stored Value Facilities Regulation
• Retail Payment Services and Card Schemes Regulation

Regulators

• Securities and Commodities Authority
• Central Bank of the UAE

They regulate

• the use of cryptocurrencies, stablecoins, tokens related to securities and commodities,
• requirements for ICOs, issuance, and trading of crypto assets.

Dubai

In Dubai, there is general regulation that applies to the Mainland and all free zones, except DIFC.

Law

• Dubai Law No. 4 of 2022 Concerning Regulation of Virtual Assets

Regulator

• Dubai Virtual Assets Regulatory Authority (VARA)

General Dubai legislation regulates

• issuance of virtual assets and NFTs,
• licensing of asset providers and crypto platforms.

Without a VARA license, the law prohibits

• providing services for managing crypto platforms,
• exchanging one cryptocurrency for another,
• exchanging cryptocurrencies for national or foreign currencies,
• custody and control of cryptocurrencies, etc.

Dubai also has a special financial free zone – Dubai International Financial Centre (DIFC), which is regulated by a separate government body – Dubai Financial Services Authority (DFSA).

Since November 1, 2022, Consultation Paper No. 143 has been in effect, which contains comprehensive regulation of crypto assets within DIFC. In particular, conducting crypto business in DIFC requires a separate license.

Abu Dhabi

In Abu Dhabi, there is the free zone Abu Dhabi Global Markets (ADGM). Regulation of cryptocurrencies in ADGM was introduced as early as 2018.

“The legislation of this free zone made it one of the first places in the UAE to introduce comprehensive regulation of virtual assets and to address licensing matters.” Alexandra Kurdiumova Co-founder

Laws

• The Financial Services and Markets Regulations

Guidelines

• Guidance on Regulation of Digital Securities Activities in ADGM
• Guidance on Regulation of Digital Security Offerings and Virtual Assets under the FSMR
• Guidance on Regulation of Virtual Asset Activities in ADGM

Regulator

• Financial Services Regulatory Authority (FSRA)