Financial services are evolving and changing in the Middle East thanks to technological advancements. The ongoing development of new technologies has cleared the way for fresh innovations and provided chances for significant global changes. Digital assets, such as virtual coins or tokens, have emerged as a result of the creation of distributed ledger technologies (DLT), facilitating value transfers and facilitating economic transactions.
To monitor and control the region’s developing blockchain sector, the UAE has put regulations in place. These regulations are governed by specific federal agencies. The United Arab Emirates Central Bank and the Securities and Commodities Authority are the government regulators for the financial and capital markets in the UAE. (SCA). The Central Bank, SCA, free zone regulators, the Dubai Financial Service Authority (DFSA), and the Financial Service Regulatory Authority are among the federal regulators in the UAE that have taken various legal regulatory positions. (FSRA). As the use of coins and virtual tokens is having an effect on the UAE market, the UAE will strive to carve out a dominant niche in the blockchain industry in order to be at the forefront of new business regulations. The Abu Dhabi Global Market (ADGM) has gained international recognition and attracted several centralized crypto exchanges to operate out of ADGM because it announced its virtual asset rules in advance.
Regarding ADGM, the FSRA oversees the regulation of blockchain and cryptocurrency initiatives in the UAE and issues instructions on cryptocurrencies. Additionally, it keeps an eye on blockchain-related businesses and organizations to guarantee transparency and stop financial terrorism and money laundering. Future regulations governing cryptocurrencies in the UAE will be supported by other agencies like the SCA and the DFSA. The DIFC is a financial free zone in the UAE, and the DFSA is an autonomous regulator of financial services that are provided there or from there. Asset management, stocks, mutual funds, custody, and trust services are all subject to DFSA regulation. Additionally, the DFSA is in charge of overseeing and upholding the anti-money laundering (AML) and counter-terrorist funding (CTF) regulations that are relevant in the DIFC. The Dubai Multi Commodities Center Free Zone (DMCC), a significant trade and business hub for commodities, is regarded as the most interconnected free-zone in the entire globe. It manages a crypto currency company’s formal licensing in the UAE.
There is no cryptocurrency legislation in the UAE as of right now. However, there are laws in existence, including the most comprehensive guide to cryptocurrencies in the UAE, the Regulation of Crypto Asset Activities in ADGM by the FSRA. In order to ensure security and promote innovation and competition in the financial sector, the SCA aims to complete the regulatory infrastructure for crypto assets in relation to financial markets and instruments, as well as commodities, on the one hand, and the licensing of financial activities that are related to crypto assets, on the other.
Regulators: Controlling ADGM’s virtual asset activities (FSRA guidance)
This collection of rules was issued in accordance with section 15(2) of the Financial Services and Market Regulations (FSMR) and is applicable to anyone conducting regulated activity in or out of ADGM involving virtual assets. The treatment and administration of these financial service operations by the FSRA is the main subject of this regulation. For the purpose of establishing a framework, the FSRA has defined virtual assets as follows: “Virtual Asset means a digital representation of value that can be exchanged digitally and functions as
(1) An trading medium; and/or
(2) An accounting measure; and/or
(3) A store of worth that is not recognized as legal tender anywhere.
The Virtual Asset Regulation’s goals are as follows:
- Users can make, store, and move virtual assets without the aid of a third party, in contrast to fiat currencies, which are created and issued by governments and stored and transferred in banks. As a result, regulators around the world are faced with a number of challenges, and the system is vulnerable to financial crime and other risks in the absence of regulated entities controlling the production and use of Virtual Assets.
- The framework for virtual assets successfully tackles the main risks that come with trading virtual assets. The FSRA is aware that controlling financial terrorism and anti-money laundering risks alone is insufficient to reduce other associated risks. The potential risks that could affect the stability of the financial industry have greatly increased due to the increased use of virtual assets as a method for financial transactions globally. The problem is that there are currently no safety precautions in place to guarantee that users can retrieve their Virtual Assets in the event of loss or theft.
III. The FSRA has dealt with concerns about consumer protection, technology governance, market abuse, disclosure/transparency, and the regulation of Multilateral Trading Facilities using Virtual Assets in a way that is comparable to the regulatory strategy used in relation to security exchanges around the world.
Conclusion
Since the blockchain and cryptocurrency platforms are relatively new in the UAE, there are currently no laws that regulate them. However, as the UAE has become more innovative and has adopted more technological platforms, federal authorities have established regulations that govern and regulate cryptocurrency and blockchain in the UAE. It is crucial for someone interested in cryptocurrencies to be aware of and comprehend these rules. You can also seek assistance from different crypto trading course, which guide you through all the formalities in addition to providing assistance with the cryptocurrency trading training.
