The United Arab Emirates is an ideal location to launch an innovative business. The Web3 Startup has caught the attention of entrepreneurs in recent times. We are all aware that the UAE supports startups in various ways. One of the advantages of the UAE is that it values transparency. The web3 startup is the result of these more transparent, controlled spaces.
Over the last several years, the UAE has evolved from being a purely fintech nation to becoming very active in Web3. Additionally, the government initiated major projects, such as Abu Dhabi's Hub71+ Digital Assets program, which established a US$2 billion fund to stimulate blockchain, cryptocurrency, and DeFi companies. Meanwhile, Dubai formulated a Metaverse Strategy aimed at adding AED 15 billion to the local economy by 2030.
This expansion operates under the supportive umbrella of a robust legal framework. Being the first in the world, Dubai took the bold step of establishing a cryptocurrency regulatory body in 2022, whereas Abu Dhabi's FSRA has been taking steps since 2018. In 2024, the DIFC introduced its Digital Assets Law, which formally recognised tokenised assets and smart contracts within its legal framework.
Regulatory Routes: Mainland vs. Free Zone & Who Issues Licenses
Securities and Commodities Authority (SCA) Mainland
The Securities and Commodities Authority (SCA) will likely be your regulator if you're starting a Web3 business in the United Arab Emirates. This is especially true if your company issues public tokens, runs a cryptocurrency exchange, or provides any kind of custodial service.
Virtual Assets Regulation Authority (VARA) in Dubai
For any cryptocurrency-related activity, Web3 firms headquartered in Dubai, whether established on the mainland or in a free zone such as the DMCC, IFZA, or DWTC, are required to obtain a VARA license.
The licensing model used by VARA is activity-based. The categories include custodial wallets, NFT issuance, proprietary crypto trading, brokerage services, and cryptocurrency exchanges. The staged licensing regime followed by the authority consists of a No-Objection Certificate, an MVP license, and a later full market license.
Financial Services Regulatory Authority (FSRA) in Abu Dhabi
One of the crypto regulators by dint of experience is the Abu Dhabi Global Market (ADGM) FSRA. ADGM licenses to decentralised finance platforms, tokenised securities, cryptocurrency custodians, and stablecoin projects.
Dubai Financial Services Authority
The regulator of financial services in the Dubai International Financial Centre is called the Dubai Financial Services Authority (DFSA).
User and institutional asset management functions in a Web3 effort from the DIFC. However, the DFSA only permits a handful of cryptocurrency tokens, such as Bitcoin and Ethereum. Recently, the DIFC Digital Assets Law was promulgated, establishing complete legal recognition for smart contracts and ownership of digital assets.
What are the Steps to launch a Web3 Business in Dubai legally?
Ensuring Business Activity
Whether your start-up can be regarded as a regulated entity under the law of the UAE is the primary and most crucial consideration. You will be considered a Virtual Asset Service Provider (VASP) if you manage virtual assets on behalf of others, for instance, by way of a cryptocurrency exchange, financing services, or an NFT marketplace.
Select Your Preferred Zone
The jurisdiction you choose will determine your go-to-market timescale, company expenses, and compliance approach. Each free zone or emirate has its benefits. For instance, DMCC offers growth-based networking, enabling fast setup. In turn, ADGM grants DeFi projects institutional legitimacy along with legal certainty.
Setting Up the Business
After selecting the jurisdiction, an essential step is to incorporate the legal entity. The following documents will be required: copies of passports and proof of address, CVs of all key personnel, and, most probably, a brief business plan. Some zones may also require either a clean police clearance or a declaration of purpose for the crypto activity, such as the DMCC.
Request for Special Approvals
Licensing involves several steps if a company falls under regulatory purview. For instance, VARA's licensing process typically begins with the issuance of an MVP license upon receipt of the No-Objection Certificate, allowing for incorporation. Under regulatory supervision, testing of systems can be carried out using this working license. A full market license is then issued once performance and compliance requirements are satisfactorily met.
But before granting a Financial Services Permission in ADGM, FSRA will inspect your Regulatory Business Plan, interrogate your top team, and assess your internal processes.
Launching an innovation-led business in the UAE is definitely a smart move. At Markai Corporate Services, we help you soft-launch your Web3 startup legally in any part of the UAE and assist you with ongoing tech trends that comply with your business.
Moreover, our professionals help you choose the right jurisdiction based on your business activity and ensure long-term success in the thriving UAE business market.
