• Dubai’s virtual asset authority has prohibited the use of privacy coins such as Monero and ZCash, as well as any activities related to them.
• The new set of crypto regulations require licensing and authorization for VASPs and issuers that want to operate in Dubai.
• Companies that do not comply with the new rulebook may face fines and other penalties.
Dubai Takes a Stand Against Privacy Coins
Dubai’s virtual asset authority has prohibited the use of privacy coins such as Monero (XMR) and ZCash (ZEC), as well as any activities related to them. According to the new set of crypto regulations, “The issuance of Anonymity-Enhanced Cryptocurrencies and all VA Activity[ies] related to them are prohibited in the Emirate.” The regulator defines these “Anonymity-Enhanced Cryptocurrencies” as “Means a type of Virtual Asset which prevents the tracing of transactions or record of ownership through distributed public ledgers and for which the VASP has no mitigating technologies or mechanisms to allow traceability or identification of ownership.”
The document titled ‘The Virtual Assets and Related Activities Regulations 2023’ was published on February 7, stating that it set out the regulatory framework governing virtual assets and all related activities in the nation, “including the general and specific supervision and enforcement powers of VARA.” It noted that the Dubai Virtual Assets Regulatory Authority (VARA) was established and authorized in 2022 by Regulating Virtual Assets in the Emirate of Dubai (Dubai VA Law) to regulate Virtual Assets and Virtual Asset Service Providers (VASPs).
Requirements for Crypto Firms
Therefore, the regulations have set licensing and authorization requirements for VASPs and issuers that want to operate in Dubai. Additionally, VARA has been given full power to make decisions concerning laws related to crypto-assets when necessary. These pertain to anti-money laundering measures, marketing regulations, market offenses such as insider trading or market manipulation.
Companies that do not follow these rules may be fined depending on their offense with: between AED 8m ($2.2m)and AED 50m ($13.6m)for any individual; disgorgementoftheprofitsgainedorlossesavoided; 5%-15%annualrevenueforaVASP; 200%-300%oftheprofitsgainedorlossesavoided(ifgreaterthantheabovevalues).
The regulations aim at protecting investors while encouraging innovation with virtual assets within a safe environment. Therefore, companies operating within this space must adhere strictly to these rules in order not incur hefty fines or other penalties associated with violations.