The Cabinet of the United Arab Emirates (UAE) has determined to approve an exclusive bill to administer virtual assets. The bill recommends the organization of the earliest regulatory era for the crypto world in the country. In advance of the federal-scale regulation, many supervisory endeavors have in advance been introduced by the UAE for the digital assets existing within the financially free areas.
UAE Implements a Digital Asset Legislation to Enhance Consumer Protection
These areas take into account Abu Dhabi Global Market (ADGM). In the previous year, Dubai additionally formed its distinctive crypto regulatory agency named Virtual Asset Regulatory Authority. Irina Heaver (a crypto and blockchain lawyer in the UAE) elaborated on the respective move. As per the lawyer, there are several implications to be experienced by the industry due to the respective move.
Heaver stated that the latest legislation guarantees that the institutions involved in crypto operations require getting approval and license from the latest regulatory agency. Heaver added that if any of such entities remains unsuccessful in meeting the regulatory requirements, it would be subject to heavy fines. She mentioned that stringent sanctions would be invoked as a result of non-compliance with the regulations.
In her words, the fine could be nearly 10M AED ($2.7M). In addition to this, the other penalties could include the disgorgement of yields as well as the criminal inquiry to be conducted by the country’s public prosecutor. Heaver pointed out that the respective legislation is anticipated to be implemented on the 14th of this month. Under this law, crypto entrepreneurs would need to comply with it.
Each of the Web3 and crypto-related projects existing in the United Arab Emirates will require having a proper structure for compliance with the unique federal legislation as well as the already existing legislation, according to Heaver. In the meantime, the minimum requirements are attainable in the case of many virtual asset services providers (VASPS).
New Law Includes Preventing Money Laundering and Terrorist Financing Measures
However, the lawyer revealed that several companies may find a few difficulties. In her words, the practice indicates that most of the entities dealing with crypto discover it hard even to comply with even the fundamental requirements.
The crypto lawyer additionally specified that the legislation has additionally organized minimum requirements for VASPs. As Heaver puts it, VASPs are directed to abide by the respective law to confront money laundering.
The other requirements take into account confronting terrorist financing as well as the funding of illegitimate institutions. Apart from that, the legislation also makes it clear that there would be a 3-month time given for all the entities that come in the category of VASPs for compliance. After the respective deadline, the non-compliant parties would be subject to further judicial actions.
The formation of the new legislation has been witnessed after the recent disasters in the crypto industry. The chief purpose of this legislation is to protect consumers. Heaver is of the view that it would be hard to prevent the fraud incidents like FTX in the future.
Despite the endeavors made by VARA of Dubai, it formerly authorized FTX in advance of revoking the license of the crypto exchange in November. In general, Heaver considers that the latest legislation will be beneficial for the customers, investors, as well as founders within the jurisdiction of the UAE.