Dubai Emerges as the Global Hub for Cryptocurrency Regulations, Paving the Way to Become the Next Crypto Capital

Dubai is actively supporting the growth of cryptocurrency by implementing regulations to attract crypto businesses from around the world. As a result, Dubai is on its way to becoming the global capital for crypto, with two new crypto companies recently establishing their offices in the city-state.

Sheikh Mohammed Bin Rashid, the ruler of Dubai, announced the enactment of the emirate’s first law governing virtual assets and the establishment of an independent regulator, the Dubai Virtual Assets Regulatory Authority (VARA), to oversee the cryptocurrency sector.

Dubai’s regulations focus on overseeing the development of the crypto sector rather than restricting it. This approach has attracted major players in the industry. For instance, U.S. cryptocurrency exchange Kraken has received a full license to operate a regulated trading platform in the UAE and will open its regional headquarters in Abu Dhabi. Binance, the largest crypto exchange by trading volume, is also recruiting over 100 positions in the UAE and is actively involved in shaping Dubai’s new virtual assets regulations.

The movement of Indian cryptocurrency exchange WazirX’s founders to Dubai has sparked speculation about other crypto and Web3 startups considering a similar move. Crypto.com has already announced plans to establish an office in Dubai and embark on a significant recruitment drive to strengthen its presence in the region. Bybit exchange has also received in-principle approval to conduct a full spectrum of virtual assets business in Dubai and will be moving its global headquarters to the city.

Dubai’s commitment to regulating virtual assets was solidified with the approval of the Virtual Asset regulation Law and the establishment of VARA. Sheikh Al Maktoum, ruler of the United Arab Emirates, stated that the law aims to protect investors and establish international standards for industry governance. VARA has enforcement powers in Dubai’s special development and free zones, except for the Dubai International Financial Centre.

In recognition of its efforts, Dubai awarded the title of “Best Crypto Startup Exchange” to multi-utility crypto exchange platform DhanuX at a crypto expo held in the city. DhanuX was launched in Dubai on March 5, 2022.

The United Arab Emirates is also preparing to issue federal licenses for virtual asset service providers (VASPs) by the end of the first quarter of 2022. This move aims to attract major crypto companies to the country. The Securities and Commodities Authority is in the final stage of amending legislation to allow VASPs to establish their operations.

Furthermore, Dubai has created an economic free zone that allows businesses dealing with crypto assets to operate. The Dubai Multi Commodities Center (DMCC) signed an agreement with the Securities and Commodities Authority (SCA) to offer licenses to crypto firms. The DMCC Crypto Center will screen the applicants, and successful ones will receive the licenses. This initiative has attracted significant investment interest in blockchain and crypto firms.

Dubai also offers attractive taxation policies for virtual currency. There is zero percent personal income tax on gains from crypto for tax residents of Dubai, including capital gains, business income, and salaries.

While crypto mining is not legal in Dubai, there is a thriving ecosystem for blockchain and crypto firms. The DMCC provides opportunities for investors to establish crypto trading companies based on the regulations of the Abu Dhabi Global Market.

Dubai’s efforts to attract crypto businesses and create a business-friendly ecosystem with strong regulations reflect its determination to become a global hub for the industry. The recent granting of virtual assets licenses to major crypto exchanges further solidifies Dubai’s position as the upcoming crypto capital of the world.