Dubai regulator announces policy on cryptocurrencies, bans highly anonymous currencies

UAE Dubai Cryptocurrency Regulation Policy

The United Arab Emirates (UAE) Dubai’s Crypto Assets (Virtual Currency) Regulatory Authority (VARA) has released cryptocurrency-related regulatory guidelines on the 7th. It also includes a ban on highly anonymous currencies.

The guidelines explain the basic principles and goals of cryptocurrency issuance, licensing, anti-money laundering/terrorist financing prevention, marketing and promotion, etc.

The UAE “prohibits the issuance of cryptocurrencies with enhanced anonymity and all related business activities,” VARA said.

Although the issue has not been specified, the corresponding token is “a token that prevents the tracking of transactions and the recording of ownership via a distributed ledger,” and is a technology that can reduce the anonymity of virtual currency companies. defined as a token that does not have

Typical anonymous currencies include Monero (XMR) and Zcash (ZEC). Regulatory authorities regard this as a problem because of its high anonymity and the concern that it may be misused for money laundering. It has been discontinued on Japanese virtual currency exchanges.

Regulates violations and licensing system

The guidelines listed insider trading and market manipulation as violations in the market. Individuals will be fined up to about 700 million yen (20 million dirhams) and cryptocurrency service providers up to about 1.8 billion yen (50 million dirhams) if they do so.

It also stipulated that all entities must apply for, obtain and maintain a license issued by VARA to operate as a cryptocurrency service provider in the UAE. The license can be revoked if there are rule violations or if the entity becomes insolvent.

Basic Principles of Virtual Currency Regulation

Dubai’s Virtual Currency Regulatory Authority (VARA) will be established in 2022. It is a regulatory body tasked with regulating and supervising cryptocurrencies and cryptocurrency service providers throughout the Emirate of Dubai. The Dubai International Financial Center is excluded from VARA’s regulation and supervision as it has its own regulatory authority.

VARA identified the following basic principles to guide the guidelines:

• Market health and stability
• consumer protection
• Supporting technology neutrality and innovation
• Regulatory flexibility
• Regulatory efficiency and balance

Regarding “technology neutrality,” VARA says it does not judge which innovations are worthwhile or not. The policy is to prevent illegal or harmful activities, rather than discriminating against specific technologies by setting restrictions.

Regarding “regulatory flexibility,” he said that he would flexibly respond to regulations, considering the speed of evolution of the industry. Regarding “regulatory efficiency and balance,” he explained that regulation will be enforced in the least burdensome way possible for both VARA and cryptocurrency service providers.

UAE’s Web3 strategy

The United Arab Emirates (UAE) is one of the countries that is actively fostering virtual currency and Web3. Binance, Bybit and Crypto.com are already licensed in Dubai.

UAE Minister for Foreign Trade and Talent Attraction Thani Al Zeyoudi said when Bybit obtained its license last year, “We are creating an environment that makes it easy to operate a cryptocurrency business under clear regulations.” Stated.

In addition, Crown Prince Hamdan of Dubai announced the “Dubai Metaverse Strategy” in 2022. He plans to create 40,000 jobs in the Metaverse and grow it into an economy worth 530 billion yen ($4 billion).

connection: Dubai’s Metaverse Strategy “Grow to a market size of over 500 billion yen in 5 years”

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