The adoption by the government of Dubai of the first law controlling virtual assets, as well as the establishment of an exclusive regulator to oversee the industry, comes at a time when virtual assets are becoming an increasingly important element of the UAE economy.
During the past two decades, traditional financial services have experienced remarkable growth in Dubai, which is a key regional financial services center. Traditional finance and the virtual asset market have been increasingly linked in recent years, as businesses have embraced digital/cryptocurrencies and non-fungible tokens (NFTs) in their day-to-day commercial transactions at an unprecedented rate.
Essentially, any digitally encoded token of value that can be sold, saved, transferred, or used to make payments qualifies as a virtual asset. They have the potential to make payments easier, faster, and less expensive, as well as provide alternative payment methods for those who do not have access to traditional financial products. However, if they are not properly regulated, they run the potential of becoming a virtual haven for financial criminals.
Maintaining a strong focus on safety and ethics
Because of the nature of the blockchains that enable virtual assets, transactions involving virtual assets on public blockchains can be done anonymously or pseudonymously, and in certain circumstances, fully anonymously. Increased scrutiny by regulators around the world on the hazards associated with crime, money laundering, and terrorist financing has resulted as the popularity of virtual assets continues to grow.
The new virtual assets regulation law and the regulatory authority in Dubai cover the entire spectrum of virtual assets, including services for operating and managing virtual asset platforms, exchange services between virtual assets and currencies, and virtual asset investment services, among other things.
Virtual asset exchange services between one or more types of virtual assets; virtual asset transfer services; virtual asset custody and management; virtual asset custody and management. Services relating to the management of virtual assets, as well as services relating to the sale and trading of virtual tokens, are provided.
Assets being digitized
The United Arab Emirates has been swift to accept and implement the digitization of assets, even as it acknowledges the inherent risks involved in the industry.
The need for authorities to control the industry in collaboration with various on-shore and off-shore financial and market regulators in the country has thus become important. The virtual asset industry will continue to be a source of considerable danger unless a comprehensive regulatory framework and continuing oversight are put in place.
As previously stated, the Dubai Virtual Asset Regulation Law, as well as other regulations governing virtual assets in the country, will undoubtedly protect the interests of all stakeholders while positioning Dubai and the United Arab Emirates as regional and global destinations for the virtual asset sector.