Regulators in the United Arab Emirates are ready to issue federal licenses to virtual asset service providers from the end of Q1 to attract cryptocurrency companies to the country.
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informed Bloomberg, a senior official from the UAE, who wished to remain anonymous. According to him, the UAE Securities and Commodities Authority (SCA) is at the final stage of making appropriate amendments to the legislation. The Virtual Asset Service Provider (VASP) Licensing System will allow the UAE to compete with other financial centers such as Singapore and Hong Kong. These countries are actively working to create a fully regulated environment for trading cryptocurrencies.
Late last year, the UAE government conducted a risk assessment of virtual assets. It was attended by 14 government departments and 16 private sector entities. The authorities concluded that, despite the high risk of VASP involvement in illegal financial schemes, it is better to regulate the cryptocurrency industry than to impose a complete ban on it. This will reduce possible risks and threats to financial security.
In addition, the UAE government plans to work out the regulation of mining in more detail. Recently, this industry has increasingly attracted the attention of environmentalists and legislators around the world due to high electricity consumption and possible negative impact on the environment.
The official also revealed that Abu Dhabi authorities are looking into crypto regulatory strategies used in the US, UK and Singapore. The UAE has adopted a “hybrid” approach to industry oversight. According to the official, the regulation of the cryptocurrency market will be handled by the SCA and the central bank, while local financial centers will be able to establish their own procedures regarding licensing. This includes the application process and due diligence by government authorities. Although a lot will depend on whether the organization intends to register on the mainland or in a free commercial zone.
Within a few weeks, the Financial Action Task Force (FATF) will decide whether to add the UAE to the “grey list” of countries subject to enhanced oversight for lack of enforcement of its rules. According to the official, the UAE intends to adhere to the recommendations of the FATF. The Emirates are ready to strike a “balance” by creating a favorable environment for the development of cryptocurrency and technology companies, while taking measures to combat financial crime.
This year, a law is due to come into force in the UAE that provides for five years in prison and a fine of up to 1 million dirhams for advertising fraudulent cryptocurrency schemes and unregistered ICOs. At the end of last year, Abu Dhabi authorities announced the creation of a “sandbox” where cryptocurrency companies can check their projects for compliance with regulatory standards.
Source: Bits
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