Will Dubai Become the Next Crypto Capital? UAE’s Cryptocurrency Regulations to be Implemented by 2024
Dubai has taken significant steps to support the growth of cryptocurrency and position itself as the global capital of crypto. Two new crypto companies have recently established offices in Dubai, solidifying its status as a crypto hub. Sheikh Mohammed Bin Rashid, the ruler of Dubai, announced the enactment of the emirate’s first law governing virtual assets and the establishment of the Dubai Virtual Assets Regulatory Authority (VARA) to regulate the cryptocurrency sector.
Dubai’s regulations are focused on overseeing the development of the crypto sector rather than restricting it. This approach has attracted major players in the industry. Kraken, a US cryptocurrency exchange, has obtained 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 recruiting over 100 positions in the UAE and actively contributing to the shaping of Dubai’s new virtual assets regulations.
Other crypto companies are also making moves to establish a presence in Dubai. The founders of Indian cryptocurrency exchange WazirX have shifted their base to Dubai, sparking speculation about other crypto and Web3 startups following suit. Crypto.com has announced plans to establish an office in Dubai and launch a recruitment drive to build its presence in the city. Bybit, another crypto exchange, has received 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 the crypto sector is evident in the establishment of VARA and the approval of the Virtual Asset regulation law. Sheikh Al Maktoum, the ruler of the UAE, issued the law to create a legal framework for crypto in Dubai, with the aim of protecting investors and setting international standards for industry governance. VARA has been given enforcement powers in Dubai’s special development and free zones, except for the Dubai International Financial Centre.
Dubai’s efforts to embrace the crypto industry have been recognized globally. DhanuX, a multi-utility crypto exchange platform, won the award for the Best Crypto Startup Exchange in a crypto expo held in Dubai. The Dubai Multi Commodities Center (DMCC) has also signed an agreement with the Securities and Commodities Authority (SCA) to allow licensing for firms dealing with crypto assets.
Dubai offers attractive incentives for crypto investors, including zero percent personal income tax on gains from crypto for tax residents of Dubai. The city has well-established regulatory frameworks for crypto, providing legal certainty for investors and eliminating income tax and reporting requirements. While cryptocurrency mining is not legal in Dubai, blockchain and crypto firms are thriving in the city with significant investment interest.
The government of the United Arab Emirates is actively working to attract major crypto companies by issuing federal licenses for virtual asset service providers. The Securities and Commodities Authority is in the final stage of amending legislation to allow VASPs to set up in the country.
Dubai’s efforts to develop a comprehensive ecosystem for crypto businesses have been ongoing for several years. The Dubai World Trade Center (DWTC) is collaborating with the private sector to create an attractive environment for businesses, enforce rigorous measures to protect investors, combat illegal activities, and ensure compliance.
The growth of cryptocurrency in Dubai has been marked by significant events and announcements, including the hosting of the largest crypto expo in the city and the issuance of the UAE Mediation Law, which provides a robust framework for mediation in civil and commercial disputes. The SCA has also published regulations for licensing crypto assets, requiring providers to be incorporated onshore in the UAE or within the Dubai International Financial Center.
In conclusion, Dubai is taking proactive steps to position itself as a global leader in the cryptocurrency industry. With its supportive regulatory environment, attractive incentives, and thriving ecosystem, Dubai is well on its way to becoming the world’s crypto capital. The city’s efforts to attract and enable high-growth companies demonstrate its commitment to staying at the forefront of this fast-changing industry.