Thanks to a slew of measures, the UAE has emerged as a crypto-friendly hub in the Middle East North Africa and Turkey (MENAT) region, trailing only behind Turkey and Lebanon.
In the UAE, Dubai has taken a lead in this sector, making the country the only global economy to have an independent Virtual Asset Regulatory Authority (VARA), which will govern cryptocurrency trade through a comprehensive set of legislations and internationally applicable policy frameworks.
Last year, the UAE regulators took several decisions to allow crypto trading in several free economic zones in Dubai.
Today, we approved the virtual assets law and established the Dubai Virtual Assets Regulatory Authority. A step that establishes the UAE’s position in this sector. The Authority will cooperate with all related entities to ensure maximum transparency and security for investors. pic.twitter.com/LuNtuIW8FM
— HH Sheikh Mohammed (@HHShkMohd) March 9, 2022
Crypto license
Major cryptocurrency exchange FTX Europe recently announced that it has been granted a license to operate within the UAE and is now seeking to establish a regional headquarters in Dubai.
The VA Exchange (VAX) license, which is issued under the VARA framework, enables FTX to operate within Dubai’s crypto market model that adheres to global norms set by key regulators such as the Financial Action Task Force.
Patrick Gruhn, Head of FTX Europe, told TRENDS: “The decision to create a cryptocurrency framework under prudential supervision shows that the UAE is determined to lead the cryptocurrency market in the near east and beyond.”
He said, “it is a significant achievement” to be authorized to trade crypto coins and crypto derivatives since FTX is predominantly a derivatives exchange.Â
The firm will offer complex crypto-derivative products with a centralized counterparty dedicated to professional, institutional investors within a reputed international jurisdiction.
Rigorous regulatory oversight
The license issued under prudential supervision allows FTX to operate within Dubai’s ‘test-adapt-scale’ VA market model, which has rigorous regulatory oversight and mandatory FATF compliance controls similar to the requirements of Tier 1 international financial markets.Â
Dubai’s VAX License allows FTX to be the first provider of regulated trading and clearing services for crypto-specific derivatives on trusted guardrails applicable in legacy markets like NASDAQ Dubai, assuring transparency and investor security.Â
Dubai’s VAX License allows FTX to be the first provider of regulated trading and clearing services for crypto-specific derivatives on trusted guardrails applicable in legacy markets like NASDAQ Dubai, assuring transparency and investor security. FTX will work with the emirate to set global operating standards to facilitate traceable and secure cross-border trades for the entire crypto industry.
FTX will work with Dubai on setting global operating standards to facilitate traceable and secure cross-border trades for the entire crypto industry.Â
Dubai has created a dedicated and hence specialized new regulator for the crypto area, according to Gruhn.Â
“Dubai is already a well-known jurisdiction. A specialized regulator allows the regulator to focus on the unique aspects of crypto assets and not try to apply concepts from traditional finance to crypto assets, which simply do not fit or are not meant for this new asset class,” he added.
Binance case
In addition to FTX, Binance has also obtained a crypto license in Dubai under the same program. The world’s largest crypto exchange was reportedly working to receive an operating license in Dubai last week.
Binance was given a license to be the first anchor tenant in Dubai World Trade Centre. It also won a license from Bahrain’s central bank to be a crypto asset service provider in the kingdom.Â
The pair of licenses for FTX and Binance marked the exchange’s first regulatory approvals in the Middle East region.Â
“The decision to create a dedicated regulator for the crypto industry will make Dubai more competitive compared to many other jurisdictions,” Gruhn said, adding that legal certainty and laws and regulations tailored to crypto assets are critical features for any exchange.
Regulatory clarity is so important. This new virtual asset law in Dubai is a great step forward. https://t.co/qIMFjMiSUv
— CZ 🔶 Binance (@cz_binance) March 9, 2022