Rules and Regulations of Cryptocurrencies in Dubai.

In recent years, the global economy has experienced an increase in the popularity and adoption of cryptocurrencies, while the UAE has emerged as a significant participant in this digital financial sector. In order to protect investors, promote innovation, and maintain financial stability, it is important to establish regulatory frameworks as the market for virtual assets continues to develop.

• Regulation of Virtual Assets and Their Service Providers: In accordance with Article 1 of the Cabinet Decision No. 111 of 2022, it stipulates the defined terms such as virtual assets, virtual asset service providers, and authority, which means the Securities and Commodities Authority (SCA). Furthermore, Article 4 states that those who engage in virtual asset activities—such as operating platforms, exchanging, transferring, trading, and custody of virtual assets—must obtain approval and a license from the SCA or the relevant local licensing authorities. Article 6 provides that the competencies of the authority include overseeing virtual asset activities, issuing regulatory decisions to ensure data protection, and coordinating anti-money laundering (AML) measures. According to the aforesaid decision Articles 8 -10 state that service providers are required to comply with the UAE’s AML regulations as well as any applicable international standards, such as those established by the Financial Action Task Force (FATF). Further, Article 11 deals with the fee for licensing and services, and Article 12 prescribes the penalties for any violation, including warnings, fines up to AED 10 million, and more.
• Virtual Assets Regulatory Authority: Cabinet Decision No. 112 of 2022, which supplements the aforementioned Decision No. 111 of 2022, establishes the Virtual Assets Regulatory Authority (VARA) and grants specific regulatory responsibilities for virtual assets in Dubai. In accordance with Article 2, VARA shall be responsible for licensing and supervising virtual asset-related activities in Dubai, including free zones. It requires that VARA make regulatory decisions, enforce adherence to data protection laws, establish AML policies, and inform investors about the risks involved in investing in virtual assets. In addition to this, VARA is also responsible for implementing processes that allow service providers to report security risks and breaches, collecting fees and commissions, and imposing penalties for violations and grievances related to administrative penalties. Further, Article 3 states that VARA and the SCA shall cooperate in developing an integrated system of supervision and control, as well as in the sharing of fees, commissions, and fines. 
• Grievance Committee: Dubai Administrative Decision No. 1 of 2023 establishes the Dubai Virtual Assets Regulatory Authority Grievance Committee, which is a key element of the regulatory body. The grievance committee is in charge of hearing complaints regarding any action, penalties, or sanctions imposed by applicable legislation, as well as complaints about any inspections conducted by VARA or appointed inspectors or based on applicable regulations. 

The UAE’s cryptocurrency regulations are proactive to protect investors, promote innovation, and maintain financial stability. Extensive legal structures and regulatory bodies like VARA and its Grievance Committee encourage cryptocurrency industry growth and development.