UAE aligns global standards
Clearer rules, more products
Expanding the crypto market
Fresh digital asset regulations in the UAE may encourage further tokenisation and the rollout of more complex cryptocurrency-related products, analysts say.
Tokenisation is the process of creating and trading digital tokens which are backed by real-world assets such as real estate, gold or art — on a blockchain. It enables direct and verifiable peer-to-peer transactions of these assets.
Dubai’s crypto regulator Virtual Assets Regulatory Authority (Vara) has given virtual asset service providers (VASPs) until June 19 to comply with a new set of rules that tighten security. They aim to open the market further, and bring Dubai in line with global standards on money laundering.
“The amended rulebook offers VASPs a clear and regulated pathway to offer more complex crypto products like margin lending to retail investors,” Arushi Goel, head of policy for the Middle East and Africa at cryptocurrency researchers Chainalysis, told AGBI.
“This significantly expands the market.”
Among the new rules is further clarity on tokenisation, which “continues to be a grey area in most jurisdictions”, Goel said.
Companies across the UAE have been putting the technology in place to tokenise various assets, including real estate and race horses.
The new rules also bring the UAE in line with international sanctions screening and anti-money laundering expectations.
Every VASP now has to screen clients and transactions against both international and federal law specific lists, in line with existing global standards.
The latest changes move Dubai’s regulations beyond baseline infrastructure towards accommodating a full spectrum of crypto financial services, such as retail-grade products and custody with regulatory clarity, Goel said.
The UAE, and its commercial capital Dubai in particular, has ambitions to become a centre for the emerging crypto industries, setting up Vara in 2022.
Vara, the world’s first independent regulator for virtual assets, provides regulations across Dubai’s free zones and legal mainland, excluding its International Financial Centre.
“Vara is proactively addressing systemic risks, especially around retail exposure, leverage and opaque token structures, before they become market-wide failures,” Johanna Cabildo, CEO of ethical AI training data suppliers D-GN, told AGBI.
Incidents, like the ByBit hack earlier this year – in which hackers allegedly stole $1.4 billion worth of the cryptocurrency Ethereum from an exchange based in Dubai – have added urgency to the need for more regulatory guardrails, Cabildo said.
With the new rules, Dubai moves closer in standards to places like Bermuda, Switzerland and Singapore, Cabildo said.
While the ByBit hack and other crypto-related incidents loom large in the Emirati crypto consciousness, “these changes are less a reaction, and more a precondition for the next wave of compliant, cross border capital to enter the space,” Cabildo said.
