Dubai Presses for Crypto Companies to Set Up Shop

ls law firm crypto dubai

Crypto firms say the city’s Virtual Assets Regulatory Authority has promised a regulatory framework before the end of the year.

Dubai is heavily recruiting crypto companies to establish themselves there, but the Middle Eastern nation isn’t quite ready for them. Regulations aren’t clear yet, and getting something as basic as a bank account isn’t a smooth process – at least for now.

Dubai’s Virtual Assets Regulatory Authority (VARA), a dedicated regulator for the industry, hasn’t yet released a comprehensive regulatory framework that companies can use to create or launch products, but officials have assured local companies that it will come by the end of the year, two people told CoinDesk. The regulator, established just seven months ago, has previously issued some guidelines on marketing and advertising for virtual assets.

Wealth funds in the wider region, the greater United Arab Emirates, are investing in crypto, and a large number of funds already reside in Dubai. Companies are hopeful that VARA will be friendlier to them than other jurisdictions where licensing can be slow. After all, the city is already a center for business tourism. It’s often praised for its low tax rate, its location near talent hubs like India and Pakistan, and the ease of obtaining visas for staff.

The city’s making a play to welcome the crypto industry. It stated its intentions to become a top metaverse economy and create 40,000 virtual jobs. At the same time, the UAE is working to get off the gray list of the Paris-based financial watchdog, the Financial Action Task Force. While it beefs up its anti-money laundering regime, it’s under increased monitoring.

Pre-regulation periods make lawyers wary.

“How can you be optimistic about something you haven’t read?” Irina Heaver, partner of Blockchain and Digital Assets at Keystone Law Dubai said. Before she sees VARA’s regulation and its applications, she’s establishing her clients elsewhere, she said.

Without regulation, less savory elements of the crypto industry have moved to the city, including YouTubers shilling altcoins to their audiences and other projects carrying out scams or rug pulls. The UAE has numerous free zones, which Heaver said makes it “easy to navigate and hide, unfortunately.” She’d like to see the industry cleaned up.

VARA has already handed out MVP (minimum viable product) licenses to some of crypto’s biggest exchanges. Notably, Binance, which has withdrawn applications in other jurisdictions, received an MVP license in September.


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