The United Arab Emirates (UAE) is getting ready to start issuing federal licenses to cryptocurrency service providers in the first quarter. The UAE crypto regulation will take a hybrid approach. The government hopes that a nationwide crypto licensing system will attract big companies to the region.
UAE Prepares to Regulate Crypto Sector Nationwide
The United Arab Emirates (UAE) is getting ready to start issuing federal licenses to virtual asset service providers (VASPs) by the end of the first quarter, Bloomberg reported Thursday, citing an unnamed government official.
The UAE’s Securities and Commodities Authority (SCA) is in the final stage of amending legislation to regulate VASPs. The government hopes that a nationwide crypto licensing system will attract big companies to the region.
The country completed a risk assessment of crypto assets late last year. The assessment involved 14 public-sector agencies and 16 private-sector entities. The government concluded that proper regulation, rather than an outright ban, can mitigate the risks of cryptocurrencies being used in illicit finance schemes.
The UAE official told the news outlet that the country’s crypto regulation takes into account the latest guidance from the Financial Action Task Force (FATF) as well as regulatory strategies used in the U.S., U.K., and Singapore.
The regulation will take a hybrid approach. The SCA will regulate the crypto industry with input from the central bank. Local financial centers can establish their own daily procedures around licensing. The UAE official said the government also wants to regulate the crypto mining industry.
Some of the financial free zones in the UAE have already issued licenses for VASPs. In December, Binance signed an agreement with Dubai World Trade Centre Authority to establish a global crypto hub.