The United Arab Emirates is preparing to boost investment in the cryptocurrency industry by issuing federal licenses to VASPs by the end of March.
The UAE Securities and Commodities Authority (SCA) said the country is set to issue federal licenses to digital asset service providers (VASPs) this quarter. The securities authority is expected to give the green light to crypto and cryptocurrency firms. blockchain, to settle in the country, at the end of next month.
According to report Bloomberg reported, citing a government official, that the SCA is preparing new legislation that would authorize the creation and installation of VASPs in the UAE. Such legislation is in its final stages, said the source, who asked to remain anonymous due to government policy.
The United Arab Emirates, one of the world's largest economies, is developing a business-friendly regulatory approach. cryptocurrencies, and the blockchain industry, to support financial and technological innovation and development. Issuing federal licenses to cryptocurrency companies and startups will attract major industry players to the country, boosting crypto trading and investment.
The requirements for these licenses will depend on whether companies are seeking to establish themselves in the country or in one of the free trade zones specifically, since each free trade zone will have the authority to establish its own procedures for granting licenses to companies, the official said.
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UAE, financial center for cryptocurrencies
The United Arab Emirates wants to become the global reference center for the cryptocurrency industry. According to Bloomberg, the country is competing with other jurisdictions, such as Singapore and Hong Kong, to establish itself as the most attractive option for crypto investors and blockchain companies. The creation of a licensing system, which establishes a regulated environment for crypto trading, will provide stability and security to the industry and its participants, favoring its growth, development and consolidation.
The country, a federation of seven emirates, has been getting closer to the crypto and blockchain industry for several years now. In 2017, more than 1.000 luxury apartments located in Dubai’s Science Park complex were sold using Bitcoin as a means of payment. Buyers of these luxury apartments could even pay for interior decoration using this cryptocurrency.
Crypto trading in Free Trade Zones
In 2021, the country’s free trade zones opened the doors to cryptocurrency trading. For example, the Kiklabb, Dubai, and Abu Dhabi free trade zones allow businesses to make payments using crypto assets. In late December, the Dubai government declared the World Trade Centre a comprehensive zone and regulator to boost cryptocurrency adoption and investment.
A risk assessment on cryptocurrencies and digital assets late last year concluded that proper regulation will help mitigate potential risks of financial crimes and illicit activities in cryptocurrencies, rather than an outright ban as China is doing. To date, the Dubai Multi Commodities Centre (DMCC) has issued a total of 22 permits to cryptocurrency companies and VASPs, while the Abu Dhabi Global Market has issued a total of 6 permits and the Dubai Silicon Oasis Authority at least 1 permit, Bloomberg reported.
FATF and cryptocurrency mining
The SCA is adopting the Financial Action Task Force (FATF) guidance to implement standards to combat financial crimes and ensure transparency in the system. In addition to this, the UAE government will promote gold mining. bitcoins and other cryptocurrencies within a regulated environment that guarantees the reduction of carbon emissions, for the benefit of the environment.
The United Arab Emirates is building a regulatory regime for crypto assets, where new businesses of the digital age can develop.
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