Federal licensing for virtual asset service providers (VASPs) is in the last stretch of becoming a reality in the United Arab Emirates (UAE) as the Securities and Commodities Authority (SCA) moves to amend legislation, Bloomberg reported on Thursday (Feb. 17), citing an anonymous government official.
Licensing is expected to be available by the end of March, and the UAE is planning to draw in major cryptocurrency players from around the world, the official said, per Bloomberg.
The UAE has already been trying to attract crypto firms and in 2021 conducted a risk assessment on virtual assets. The assessment included participation by 14 agencies from the public sector and 16 from the private.
See also: Crypto Scammers Will Face Jail, Hefty Fines in UAE
VASPs are considered to fall under a higher risk category when it comes to the possibilities of participation in illegal finance operations, but the UAE decided that with the regulation, threats could be contained and there was no need for a total ban.
As far regulations, the country is taking a dual approach, with the SCA handling the central bank and local finance centers developing their own daily licensing procedures, the official said, per Bloomberg.
The first step is the application process, followed by due diligence by the government. The overall process hinges on mainland establishments versus setting up in the commercial free zone. VASP permits were already issued in some of the country’s financial free zones.
Read more: UAE Approves New Digital Bank Wio
Binance, the biggest cryptocurrency exchange by trading volume worldwide, is one of several eyeing a larger footprint in the UAE. Having a nationwide licensing program in the country will put it in the same competition ring with Singapore and Hong Kong.
An ecosystem for mining with separate regulations is also on the table, the official told Bloomberg.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More