Why the UAE is poised to be a hub for virtual assets?
The Framework
The United Arab Emirates (UAE) has developed a comprehensive regulatory framework to govern the country’s financial and business sectors, including the securities and commodities markets, banks, insurance companies, and other financial institutions.
The regulatory framework is focused on ensuring the safety and soundness of the financial system, protecting investors, and promoting market integrity and transparency. The framework includes laws, regulations and guidelines issued by the UAE Central Bank (CBUAE), Securities and Commodities Authority (SCA), Insurance Authority (IA), and other relevant regulatory and governmental bodies.
The framework also includes rules and standards issued by the Dubai Financial Services Authority (DFSA), which is the regulator responsible for the Dubai International Financial Centre (DIFC); and the Financial Services Regulatory Authority (FSRA), the regulator for the Abu Dhabi General Market (ADGM).
Last year, the Dubai government also create the Virtual Asset Regulatory Authority (VARA), a first-of-its-kind regulator who deals exclusively with the regulations surrounding virtual assets and Virtual Asset Service Providers (VASPs).
Unique Selling Point
While some may look at this framework and balk at the amount of governmental authorities regulating the market, this framework in fact creates unique opportunities for any Web3 company that wants to set up operations here.
Unlike other jurisdictions with a singular regulator whose decisions are final and binding, Dubai offers Web3 projects the prospect of licensing from potentially multiple independent regulators, each of whom has a solid reputation and benefits to offer. This would allow a project to ultimately benefit from the reputation of being a UAE-based company while also having, in effect, multiple bites at the apple, if a licence for activities is something that that particular project needs.
This option for regulatory shopping within the jurisdiction is unique unto the UAE and its emiratised system of governance.
Government support
Unlike most governments around the world, the UAE government has touted itself as a supporter for VASPs and virtual assets in totality. This beacon has given hope to many legacy Web3 projects that have been effectively rendered stateless as previously popular jurisdictions have begun imposing stricter and tighter regulations, putting a chokehold on operations.
The Metaverse and Blockchain Strategies introduced by the government on a federal and emirate level, the multitude of trade licence offerings in various free zones (notably the DIFC, ADGM, DMCC and DSO) and overall robust and respected system of courts (including a specialised, newly-launched Digital Economies Court in the DIFC) makes Dubai the perfect breeding ground for any Web3 project.