Dubai’s Rise as a Cryptocurrency Hub: Exploring the Answer through Virtual Asset Regulation

Perspectives article presents diverse views, not representing the stance of “WEB3+”.
Broadening Horizons: Taiwan Deepens Financial Technology and Virtual Asset Exchange with Dubai
Innovative regulatory policies in financial technology rely on continuous international exchange and learning. During the TOKEN2049 blockchain summit held in mid-April in Dubai, Taiwan FinTech Association Honorary Chairman Tsai Yu-Ling led a delegation of association members to visit Dubai’s local Virtual Assets Regulatory Authority (VARA), including heavyweight technology companies such as E-Genius Corporation, Rich Growth Digital Co., Ltd., Hayat Digital Technology Co., Ltd., and Pioneer Digital Technology Co., Ltd., for an in-depth exchange of industry regulatory experiences with VARA’s CEO, Matthew White.
As an autonomous entity with legal status and financial independence, VARA is responsible for protecting and regulating the interests of stakeholders in virtual asset services. This institution oversees the issuance, provision, and disclosure of virtual assets (including FT and NFT), collaborating with federal bodies such as the UAE Central Bank to develop ethical guidelines, policies, and strategic plans.
In Dubai, any entity providing virtual asset services must obtain a license from VARA and possess the corresponding commercial trade license to operate. Entities violating Dubai’s Virtual Assets Regulatory Law may face severe penalties, including license suspension.
During this exchange meeting, both sides deepened their understanding of each other’s financial technology and virtual asset regulatory frameworks, and jointly explored VARA’s regulatory framework.
Dubai’s government authorities, in the face of innovation in financial technology and the rapid development of virtual asset services, are committed to providing a stable regulatory environment for operators while maintaining an open attitude towards innovation. The principle-based regulatory model enables regulatory authorities and operators to focus more on the value brought by industry innovation through products and services and to pay more attention to the activities and behaviors of operators. Such a regulatory approach gives operators a certain degree of flexibility to adapt and innovate in a rapidly changing market, while ensuring consumer protection and market stability.
Exploring VARA’s innovative regulatory strategies
During the conference, VARA representatives detailed the two-stage process of license application: preliminary approval and full document review, ensuring that all entities wishing to operate virtual asset services in Dubai comply with local laws and regulations. VARA’s transparent process combined with stringent regulatory standards reflects the regulatory authority’s commitment to ensuring high-quality financial services.
In addition to guidance on license applications, VARA also shared how it supports virtual asset service providers and establishes partnerships.
In dealing with applicants for licenses and existing service providers, VARA continues to maintain “one-on-one” communication channels with various operators to keep abreast of their latest developments and business plans. Addressing the basic operational needs of operators, VARA actively communicates with local banks, accounting firms, and other financial service institutions to help more institutions understand and support virtual asset-related businesses, including supporting licensed operators in opening bank accounts and trusts and compiling a list of accountants familiar with the encrypted industry audit to ensure that operators can comply with local regulations while smoothly conducting business operations.
Friendly interaction between regulatory authorities and operators enhances operators’ operational capabilities and business motivations in Dubai’s market, contributing to consolidating Dubai’s development environment towards global innovative financial technology. For global providers of virtual asset services, Dubai provides an ideal opportunity to enter international markets through the platform created by VARA.
References:
Introduction of VASP regulatory framework proposed by Dubai VARA
Promoting Innovation: VARA’s Regulatory Sandbox and Corporate Support
While encouraging innovation, maintaining market stability is one of VARA’s core strategies.
VARA tailors a regulatory sandbox for virtual asset service providers, allowing operators to test new products and services in a guided and manageable environment without immediately meeting all regular regulatory requirements.
As entrepreneurs develop new products or services, regulatory authorities also provide compliance guidance in line with their principles. This provides entrepreneurs with a unique opportunity to evaluate the potential impact and effectiveness of their innovations before market launch. VARA representatives state that the sandbox is designed to reduce risks during the innovation process while gathering practical data on new technologies and business models to optimize its long-term regulatory framework.
For startups with insufficient capital to independently complete license applications and compliance frameworks, VARA is also considering a trial operational approach where “mature companies provide a protective framework for startups to operate as subsidiaries of the framework.” Although this scheme has not yet been formally implemented, it is a reference practice that can help startups reduce initial operational complexity and costs, accelerating market entry speed.
Dubai: Innovation Frontiers in Virtual Asset Regulatory Strategy
As of April 17, 2024, there have been a total of 17 successful cases of VARA issuing licenses for virtual asset service providers (VASP Lisence), coming from enterprises worldwide, showcasing Dubai’s geographical and economic policy advantages as a springboard for expanding into the Middle East and global markets. In addition, VARA not only supports the business development of entering enterprises but also actively engages in dialogues and collaborations with regulatory authorities in other countries to ensure the compliance and efficiency of cross-border services.
Through this professional exchange meeting between the Taiwan FinTech Association and VARA, it is also expected to achieve more interaction and cooperation in promoting global technological innovation and improving business compliance goals, and Taiwan’s VASP startups are expected to explore more opportunities for international expansion and cooperation through the platform created by VARA.
Perspectives articles present diverse views, not representing the position of “WEB3+”.