The United Arab Emirates is one of the most advanced countries in the world. The country is known for its innovation and new-age technologies. Since the UAE is renowned for seeding and encouraging modern ideas, it also deals in cryptocurrency to unlock seamless digital transactions.
The UAE is considered the most progressive crypto country across the globe. In the initial phase, these digital currencies weren’t legal, but they got regularized with time. There are many cryptocurrencies in the market, including Bitcoin (BTC), Ethereum (ETH), and Tether (USDT).
The Dubai Financial Services Authority now allows various trade and visa licenses via cryptocurrencies. In April 2018, the UAE declared the Emirates Blockchain Strategy 2021, by which the country aims to carry out fifty percent or more of its government transactions on a blockchain platform by 2021, thus establishing itself as the first blockchain-powered government.
What is Cryptocurrency?
Cryptocurrencies are a digital payment method that offers freedom of transactions without a bank's involvement. These digital currencies are a payment mechanism independent of banks, so transactions are authenticated utilizing a peer-to-peer network that allows anyone, anywhere to send and receive money.
Since Bitcoin payments are strictly digital entries in an online database that subsequently records specific transactions, they cannot be used in the real world for payment. The funds are transferred in bitcoin, and these transactions are recorded in a public ledger. The cryptocurrency is stored in a digital wallet.
In layman's terms, it means complex coding is used to store and transmit Bitcoin data between wallets and public accounts. The purpose of encryption is to ensure safety and security.
The UAE is attempting to stimulate the use of cryptocurrency throughout the country. For instance, the Multi Commodities Centre-Market released a Crypto Centre to operate firms studying different technologies associated with crypto and Blockchain. More specifically, the DMCC houses businesses that are engaged in or support companies that will issue, list, and trade all cryptocurrencies, as well as those building trading platforms from a blockchain perspective, with full backing from the national government.
Way before Ripple, a tech organization based in the United States, many new and established crypto-focused firms were also considering moving their headquarters to the UAE because of its favorable crypto laws. In 2019, the Securities and Commodities Authority (SCA) opened a consultation on cryptocurrency assets' regulatory framework with the industry and the general public.
Cryptocurrency Regulations
Ras Al Khaimah (RAK) Digital Asset Oasis
The UAE recently announced the RAK Digital Assets Oasis, the world's first and only free zone dedicated to digital and virtual asset companies innovating in new and emerging sectors such as the metaverse, blockchain, utility tokens, virtual asset wallets, non-fungible tokens ("NFTs"), Decentralized Autonomous Organizations ("DAOs"), DApp Systems, and other Web3-related businesses. The development of this Digital Assets Oasis shows the UAE's commitment to developing and regulating the rapidly expanding cryptocurrency sector.
Virtual Asset Regulatory Authority (VARA)
In February 2023, VARA announced its Full Market Product (FMP) Regulations, considering it "the world's first, tailor-made Virtual Asset regime." The FMP requirements cover a broad range of requirements applicable to all virtual asset suppliers. These provide oversight of market conduct, licensing, business activity, and cybersecurity. The FMP law also contains a set of activity-specific laws meant to target VARA-licensed firms, establishing different requirements for each company according to the nature of its license.
Securities and Commodities Authority (SCA) and UAE Central Bank
Earlier in the year, in January 2023, the SCA, the UAE's federal securities regulator, took over the regulation and supervision of the cryptocurrency industry and has been doing so ever since. On this day, applications from organizations wishing to provide cryptocurrency services in the UAE will be accepted beginning on licenses granted by SCA on April 17, 2023. All virtual-asset service providers in the UAE, except those licensed under financial-free zones, are required to obtain their permit.
The UAE aims to build the path towards Crypto. Some of the milestones supporting this futuristic vision include the UAE Blockchain Strategy, the creation of VARA – the Virtual Assets Regulatory Authority – and so on, making the UAE the pioneer of the digital finance future.
To stay updated with the regulations while collaborating in this rapidly developing industry, Markai Corporate Services provides advanced Crypto solutions tailored for businesses. Want to learn more about how Markai can help you protect your blockchain? Reach out to us now!
