The Dubai Virtual Assets Authority has banned the use of confidential coins such as Monero (XMR) and ZCash (ZEC) and any activity related to the coins.
According to the new set of rules for cryptocurrencies,
“Issuance of anonymity-enhanced cryptocurrencies and all related VA activities are prohibited in the Emirate.”
The regulator defines these “anonymity-enhanced cryptocurrencies” as
“Means a type of virtual asset that prevents the tracking of transactions or the recording of ownership through distributed public ledgers, and for which VASP has no mitigating technologies or mechanisms to enable ownership to be tracked or identified.”
The document, titled “Virtual Assets and Related Activities Regulations 2023,” was published on February 7, stating that it establishes a regulatory framework governing virtual assets and all related activities in the country, “including general and special supervisory and enforcement powers of VARA.”
It was stated that Dubai Virtual Asset Regulatory Authority (VARA) was established and authorized in 2022 by the Virtual Assets Regulation in the Emirate of Dubai (Dubai State of Virginia Law) to regulate Virtual Assets and Virtual Asset Service Providers (VASPs).
As such, the regulations establish licensing and authorization requirements for VASPs and issuers wishing to operate in Dubai.
In addition, VARA has been given full authority to make decisions and adapt laws related to crypto-assets where it sees fit, stating that,
“VARA may, in its sole discretion, classify or otherwise provide a clarification or conclusion, by general notice or on a case-by-case basis, regarding [серед іншого] any virtual asset or type of virtual asset as prohibited in the Emirate”.
The regulator also outlined the requirements that crypto companies must meet before they can operate in the country. They relate to the fight against money laundering and terrorism, marketing regulations and market offenses such as insider trading and market manipulation.
Companies that do not comply with the new set of rules can be fined for violations and depending on the offense:
- between AED 8 million ($2.2 million) and AED 50 million ($13.6 million) for any individual;
- withdrawal of received profits or avoidance of losses;
- 5%-15% of annual income for VASP;
- 200%-300% of profit received or loss avoided (if they exceed the above values).
Meanwhile, as reported in late January, the UAE said it plans to use cryptocurrency for trade in the future, with Minister of State for Foreign Trade Thani Al Zeyoudi stating that “crypto will play an important role in UAE trade in the future. Most importantly, we provide global governance when it comes to cryptocurrencies and crypto companies.”
Al Zeyoudi added that the UAE has focused on establishing itself as a major hub with a cryptocurrency policy that also has sufficient safeguards.
