UAE regulators to allow Dubai-licensed VASPs to service entire country

The United Arab Emirates’ securities regulator signed a cooperation agreement with Dubai’s crypto regulator to demonstrate “regulatory cohesion” across the country by streamlining its licensing regime. 

The UAE’s federal financial agency, the Securities And Commodities Authority (SCA) and Dubai’s crypto regulator, the Virtual Assets Regulatory Authority (VARA), announced an agreement that would allow the mutual supervision of virtual asset service providers (VASPs) in the country. 

With the agreement, VASPs operating in Dubai that wish to obtain a license from VARA “can be registered by default with the SCA to service the wider UAE.” However, the SCA clarified that VASPs who wish to operate in emirates other than Dubai must still get a license from the regulator.

The announcement explained that the agreement covers the mechanism for the mutual supervision of crypto providers. This includes penalty and fine imposition, information exchange, and cooperation in employee training. 

Regulatory cohesion across the country

His Excellency Helal Saeed Al Marri, the chairman of VARA’s executive board, said that the collaboration with the SCA allows for an “efficient passportability of regulated services” while providing market risk assurance across the country. The official said: 

“Today marks a pivotal milestone, demonstrating regulatory cohesion across the UAE, driving forward our shared vision for a robust, secure and interoperable virtual assets ecosystem.” 

Meanwhile, His Excellency Mohamed Ali Al Shorafa, the SCA’s Chairman, said that the goal is to foster the growth and stability of virtual assets in the UAE. The official added that this ensures the enforcement of Anti-Money Laundering (AML) legislation and boosts the confidence in the country’s investment ecosystem. 

Related: Standard Chartered begins UAE crypto custody services with BTC, ETH

UAE demonstrates crypto-friendliness

Apart from regulators collaborating to foster the growth of crypto in the region, its judicial approach to crypto also saw new developments last month. On Aug. 16, UAE lawyer Irina Heaver explained the Dubai Court of First Instance recognized crypto as a valid form of payment under employment contracts. 

Heaver said that the ruling in case number 1739 of 2024 sets a positive precedent that encourages the integration of digital currencies in financial transactions.

Because of such developments in the region, a study also recognized the country as one of the leaders in global crypto adoption. A study by investment migration consultancy firm Henley & Partners showed that the UAE ranks third globally in crypto adoption, surpassing countries like the United States.

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