Virtual Asset Service Providers in UAE: Changes in Regulation

04/18/2023 07:54 • NFT Newsflash • 106 views

According to reports, the Securities and Commodities Administration (SCA) of the United Arab Emirates has announced that it will begin accepting license applications from companies wishing to provide virtual asset services in the country. All virtual asset service providers (VASPs) operating in the country must submit applications and obtain regulatory approval, except for those licensed in the country’s financial freedom zone. Meanwhile, digital asset companies operating within the Emirate of Dubai must still comply with their own financial regulatory authority, the Virtual Asset Services Authority (VARA). These companies also need to apply for and obtain licenses from VARA.

UAE Federal Financial Supervisory Authority Open VASP License Application

The Securities and Commodities Administration (SCA) of the United Arab Emirates (UAE) has announced new regulations regarding virtual asset service providers (VASPs) in the country. These regulations come as a response to the increase in popularity of virtual asset services and are aimed at protecting consumers and ensuring transparency in the market. This article will discuss the new regulations and their impact on VASPs operating in the UAE.

What are Virtual Asset Services?

Virtual asset services refer to businesses that provide cryptocurrency-related services, such as exchanging, transferring, or storing cryptocurrencies for customers. These services have gained significant popularity in recent years as more and more people turn to cryptocurrencies as a means of investment or payment.

New Regulations for VASPs in the UAE

Under the new regulations, all VASPs operating in the UAE must submit applications and obtain regulatory approval from SCA. This requirement applies to all VASPs except for those operating in the country’s financial freedom zone.
The new regulations aim to protect consumers and ensure that VASPs are operating in a fair and transparent manner. The SCA will carefully review each VASP’s application to ensure that they meet the required regulatory standards. VASPs will also be subject to ongoing supervision to ensure that they continue to meet these standards.
While digital asset companies operating within the Emirate of Dubai still need to comply with their own financial regulatory authority, the Virtual Asset Services Authority (VARA), they also need to apply for and obtain licenses from VARA.

Impact on VASPs Operating in the UAE

VASPs operating in the UAE will need to carefully review the new regulations to ensure that they comply with all requirements. Failure to comply could result in penalties or even revocation of their license.
The new regulations are also likely to bring greater transparency and security to the virtual asset market in the UAE. Consumers will have greater confidence in VASPs that have undergone strict regulatory scrutiny and ongoing supervision.

Conclusion

The new regulations regarding VASPs in the UAE represent a significant change in the regulatory environment for virtual asset services. VASPs operating in the UAE must carefully consider the new requirements and ensure that they comply in order to avoid penalties or license revocation. However, this change is ultimately aimed at ensuring greater transparency and security in the virtual asset market, which will benefit both consumers and VASPs.

FAQs

Q: What are virtual asset services?

A: Virtual asset services refer to businesses that provide cryptocurrency-related services such as exchanging, transferring, or storing cryptocurrencies for customers.

Q: What are the new regulations for VASPs in the UAE?

A: All VASPs operating in the UAE must submit applications and obtain regulatory approval from the Securities and Commodities Administration (SCA). This requirement applies to all VASPs except for those operating in the country’s financial freedom zone.

Q: What is the purpose of the new regulations?

A: The purpose of the new regulations is to bring greater transparency and security to the virtual asset market in the UAE and to protect consumers by ensuring that VASPs are operating in a fair and transparent manner.

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