The crypto licenses will allow the world’s biggest crypto companies to set up shop in the country legally.
The United Arab Emirates is formulating a licensing regime for virtual asset service providers to formalize the crypto economy and become a global industry hub.
UAE Prepares to Issue Crypto Licenses
The United Arab Emirates is looking to get in on the crypto boom.
According to a Thursday Bloomberg report citing government officials, the UAE is readying to issue federal licenses for virtual asset service providers in a bid to attract some of the world’s leading crypto companies.
The monarchy’s federal securities regulator, the Securities and Commodities Authority, is reportedly in the final stages of developing a licensing framework that would let Virtual Asset Service Providers like cryptocurrency exchanges set up shop in the country, the government official said.
In developing the new rules, Abu Dhabi reportedly considered the Financial Action Task Force’s latest guidance on regulating cryptocurrencies and the strategies employed by the U.K., U.S., and Singapore. Ultimately, it settled for a hybrid approach whereby the SCA and the central bank would be responsible for regulation, while the regional financial centers would have autonomy concerning day-to-day licensing procedures.
According to an October 2021 Chainalysis report, the UAE is the third-largest crypto market in the Middle East behind Turkey and Lebanon. Based on data from July 2020 to June 2021, the region’s global crypto footprint was relatively modest, marking only 6.6% of the global crypto activity. However, it was also one of the world’s fastest-growing markets, marking a 1500% increase in activity over the period.
The proposed federal licensing regime for crypto firms would help the UAE compete with rival financial centers like Hong Kong and Singapore, which are also gearing up to establish fully regulated crypto-friendly environments. Besides the licensing, the country also wants to promote a business-friendly climate for cryptocurrency miners while considering the industry’s potential impact on the environment.
One of the firms already working to establish a bigger presence in the region is Binance, the world’s largest cryptocurrency exchange. In December, the exchange announced an agreement with the Dubai World Trade Centre Authority to “outline the vision of accelerating the set-up of a new industry hub for Global Virtual Assets.”
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.
