The UAE is poised to emerge as the first choice for global companies in the digital asset industry for their global expansion, following the Gulf country approving a new regulation to govern virtual assets in the country. The UAE Cabinet has recently revised a number of its laws, including those relating to virtual firms and virtual assets.
UAE enacts new virtual assets commercial law
According to sources, the UAE has considered the supply of services, business conduct, and activities involving virtual assets to be virtual firms. With its new commercial law, the government entity has confirmed that businesses involving virtual assets are considered commercial enterprises in the UAE.
This follows the UAE Cabinet of Ministers’ December 2022 resolution to regulate virtual assets, which will take effect in January 2023. The new legislative framework is also anticipated to accelerate the widespread use of blockchain technology for regional economic growth.
Several global and regional blockchain, cryptocurrency, and non-fungible token (NFT) companies are hurriedly finalizing plans to establish or expand operations in the country in the next months, according to industry sources.
According to the UAE’s Undersecretary of the Ministry of Economy, Abdullah Al Saleh, the development of the business sector is a state priority, and fostering its expansion through legislation is a top priority.
The Dubai Virtual Asset Regulation Law and the Dubai Virtual Assets Regulatory Authority (VARA) would supervise the expansion of the business environment for virtual assets, including regulation, governance, and licensing. The new regulation is anticipated to become effective on January 15, 2023.
The most recent legal framework will aid the authorities’ attempts to establish a compliant and progressive regime in the UAE, allowing global crypto businesses to develop compliant blockchain applications that will fuel mainstream adoption and economic growth in the region.
As a result, the UAE Ministry of Economy has released a new commercial transaction in which one of the most significant aspects is a reduction of the legal age of business capacity to 18. In addition, a legal reference for commercial transactions for banking institutions is established to encourage investment.
In addition, the framework must support Islamic banking, alter the regulations governing the development and regulation of financial markets, and provide assistance to firms in the technology sector, particularly the digital sector.
The new law aims to support the commercial interests of the state ad comply more with international trade, strengthen the position of the UAE on the global trade map, keep abreast of international best practices in commercial transactions, and ensure the principles of transparency and clarity in them.
Abdullah Al Saleh, UAE’s Undersecretary of the Ministry of Economy
What will the new set of regulations achieve?
According to Al Saleh, the new framework is expected to improve the country’s ranking on pertinent economic competitiveness indices. The regulation would help speed the transition of digital applications in the country’s commercial sector and boost the UAE’s position as a hub for business activity in the fields of technology, innovation, and the new economy.
The United Arab Emirates will create a virtual business system, commercial store, and commercial transactions using cutting-edge technologies and virtual settings. In addition to considering the provision of services and the conduct of business and activities related to virtual assets as virtual businesses in accordance with UAE’s Council of Ministers Legislation governing virtual assets and their service providers, this provision applies to the provision of services and the conduct of business and activities related to virtual assets. They include:
• Equipping the virtual business with authenticity so that it is subject to the same regulations as other businesses that are presented realistically.
• Providing validity and integrity to physical and digital commercial books.
• Selling movables, as opposed to used movables, at public auction and making bids available via a licensed electronic platform or hall or by various contemporary technology means.
The announcement coincides with the recent statement by the Abu Dhabi-based crypto and Blockchain association to establish a Regulators Committee to help push change and learn lessons following the collapse of the FTX exchange last year.
It is pivotal for the industry to help the investing public understand the opportunity and corresponding risks that come with investing in cryptocurrencies. The importance of holistic regulation to minimize regulatory arbitrage is key to reducing the impact of the recent events as well as bringing confidence back to the industry.
Jehanzeb Awan of the Middle East, Africa, and Asia CBA (MEAACBA)
The MEAACBA stated that its board is establishing a Regulators Committee with the intention of bringing together the relevant regulators in the regions covered by the association in order to construct regulatory regimes that permit effective control of the cryptocurrency business.