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Crypto-Service Providers To Be Authorized in UAE

Virtual asset service providers (VASPs) will soon be granted federal licenses in the United Arab Emirates, a government official said.

While Singapore and Hong Kong are already presenting themselves as global crypto centers through workable regulatory frameworks, a national licensing scheme for crypto services companies might help the UAE compete with these financial capitals. According to the official, the UAE intends to create a crypto mining ecosystem that will be controlled.

Dubai International Financial Center (DIFC), a major hub for Wall Street banks in the Middle East, does not currently have any permissions for VASPs, despite being a financial free zone with more than a dozen VASP licenses granted to other financial centers in the UAE.

Market research

To their credit, the United Arab Emirates last year carried out a risk evaluation of VASPs in collaboration with 14 governmental agencies and 16 private sector participants. In spite of a “high danger” of VASPs being misused for illicit financing, the government decided that adequate regulation, rather than outright prohibition, would better offset those threats, according to the report.

By trading volume, Binance Holdings Ltd. is the world’s largest cryptocurrency exchange; it is one of many companies seeking to extend their business in the nation. While Dubai World Trade Center Authority was still developing laws for its embryonic cryptocurrency center, Binance has recently established a local staff in Dubai. Because of Changpeng “CZ” Zhao’s rapid rise to prominence as CEO, the city has been mooted as a possible location for the company’s headquarters.

Cryptocurrency exchange Kraken is now looking for the Middle East North Africa CEO in Abu Dhabi, while CoinMENA BSC and Rain Financial Inc. are also active in the region. UAE is currently the Middle East’s third-largest crypto market, behind Turkey and Lebanon, says Chainalysis.

Highlights

  • According to a government official, the UAE is getting ready to give federal licences to virtual asset service providers (VASPs).
  • According to the official, the UAE intends to create a crypto mining ecosystem that will be controlled.

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