Approval of virtual asset law, oil kingdom Dubai once again at the forefront of the world

On March 9, Sheikh Al Maktoum, Vice President and Prime Minister of the UAE, signed the first law regulating virtual assets in Dubai, the Virtual Assets Law, and established the An independent body to oversee the cryptocurrency industry.

The law establishes the regulatory status of the United Arab Emirates (UAE) in the industry.

Notably, the same day the Biden administration released its regulations on cryptocurrencies in an executive order document. The UAE and the US seem to be both ready to embrace cryptocurrencies.

Industry insiders told the "Blockchain Daily" reporter that, as a major oil country, the UAE's resources are relatively single and fragile, and the Dubai government also needs to think about how to find opportunities in the new economic system. The innovation of blockchain technology in digital assets and financial industries is very inspiring to them.

Opportunities for Dubai in the New Economy

According to the Virtual Assets Act, Dubai residents are required to register with VARA (Dubai Virtual Assets Regulatory Authority) before engaging in crypto-related activities, and businesses engaging in virtual asset activities must also establish a presence in Dubai. These activities include operating cryptocurrency exchanges, conducting cryptocurrency transfers, and other services related to the offering and trading of tokens.

The Virtual Assets Act did not specify which cryptocurrencies would be legally bound, but added that the Dubai Virtual Assets Authority would classify and designate types of virtual assets in addition to setting rules and controls.

The Dubai Virtual Assets Authority will monitor digital transactions and protect users’ personal data. It will also be responsible for licensing and regulating industries in mainland Dubai and the Free Zone area (excluding the International Financial Centre).

The virtual asset law makes it clear that anyone found to be violating the new law could face fines or suspension or cancellation of their business license. The board of directors of the Dubai World Trade Centre will decide on the course of action in the event of a breach.

Sheikh Al Maktoum, Vice President and Prime Minister of the UAE, noted that the law is an important step to advance the digital industry and protect the rights of investors.

"I think there is a certain value in promoting the digital asset industry with the country, including compliance and transaction transparency." Deng Jianpeng, a professor at the Law School of Central University of Finance and Economics, told the "Blockchain Daily" reporter.

Deng Jianpeng further analyzed that the mainstream economy of the Middle East countries has always been dominated by the oil economy, and these countries have also tried to make breakthroughs in economic diversification in recent years. As we all know, blockchain is one of the most revolutionary technologies since the birth of Internet technology.

"Dubai UAE wants to make a new attempt in this area, so everyone also sees that the blockchain itself has a lot of novelties in terms of digital assets and virtual assets, including innovation in the financial industry." Deng Jianpeng said.

Hu Jie, a professor at Shanghai Advanced Institute of Finance, Shanghai Jiao Tong University, expressed the same view in an interview with a reporter from "Blockchain Daily".

Hu Jie said that the United Arab Emirates and Dubai, as big oil countries, actually have relatively single and fragile resources, and the Dubai government has been thinking about how to find opportunities in the new economic system.

Hu Jie said that blockchain, as a new technology, is still in the stage of exploration and precipitation in the world. Dubai has attracted global blockchain companies and talents through open policies, and will take the lead in the development of the blockchain industry in the future. machine.

Binance is discussing applying for a business license

Due to the UAE's open policy for cryptocurrencies, many companies have been attracted to settle in.

According to local news reports in the UAE, the digital economy will contribute a total of about AED 100 billion (about US$ 27.25 billion) in 2021, accounting for 4.3% of the UAE’s GDP. The country is home to more than 1,400 blockchain or crypto startups with a combined valuation of AED90 billion ($24.5 billion).

According to data compiled by third-party service Chainalysis from July 2020 to June 2021, the UAE is the third largest cryptocurrency market in the Middle East, after Turkey and Lebanon, with a transaction volume of about $26 billion.

Notably, the approval of the Virtual Assets Act and the establishment of the Dubai Virtual Assets Authority is a step forward for Dubai. Dubai had previously planned to regulate cryptocurrencies in December 2021, when cryptocurrency exchange Binance partnered with the Dubai World Trade Centre to make it a full-scale crypto zone to accelerate industry adoption.

Dubai is part of the United Arab Emirates, which is preparing to issue federal licenses for virtual asset service providers by the end of the first quarter of 2022.

“We welcome this important development,” Richard Teng, head of Binance Middle East and North Africa, said in a statement. “We will continue to work closely with DWTC (Dubai World Trade Centre) to help make Dubai world-class and advanced. crypto regulatory environment.”