Dubai Presses for Crypto Companies to Set Up Shop
- December 8, 2022
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According to crypto firms, the Virtual Assets Regulatory Authority has promised to release a regulatory framework by the end of this year.
Dubai has established itself as a global hub for digital innovation and development, but crypto companies are struggling to navigate the complicated regulations in the Middle Eastern nation. Getting a bank account is difficult because there are no clear guidelines just yet.
Dubai’s Virtual Asset Regulatory Authority (VARA) is devoted to regulating the industry and has started by issuing some guidelines. The regulator has assured local companies that it will release a comprehensive regulatory framework by the end of this year, two people told CoinDesk. The last 7 months have seen the release of some guidelines on marketing and advertising for virtual assets from the regulator, who was established just 7 months ago.
Businesses that want to start capitalizing on the crypto market should think about establishing offices in Dubai. Wealth funds in other regions, like the wider UAE, are investing in crypto and but many already live and work in Dubai. While other jurisdictions do move more slowly on licensing applications, VARA is a major city that’s friendlier to businesses. It’s close to talent hubs like India and Pakistan and it has an easy-to-obtain visa process for employees.
Dubai is making a play to attract crypto companies. It plans to become one of the top 3 metaverses and create 40,000 jobs in the industry. At the same time, it’s working hard to get off that gray list and strengthen its anti-money laundering department. While it’s beefing up those resources, they are under closer supervision.
Lawyers may not be confident during pre-regulation periods.
“How can you be optimistic about something you haven’t seen?” Irina Heaver, partner at Keystone Law Dubai, said. “What I see is that this regulation applies to tokenizing securities offerings and the secondary market, which are things we don’t do.” When she sees VARA’s regulation and its applications, she’ll establish clients elsewhere.
Some less-savory elements of the crypto industry have moved into Dubai as a result of lax regulation. This includes YouTube videos in which influencers post about altcoins to their audiences and other projects that scam or pull a “rug” from under their supporters. There are numerous free zones, Heaver said which makes it “easy to hide,” unfortunately. Ideally, she would like to see cleaner industry practices.
VARA has already given MVP licenses to some of the biggest crypto exchanges. Notably, Binance received an MVP license in September.