UNITED ARAB EMIRATES Law and Practice Contributed by: Arnold Krutilins and Gabrielle Margerison (nee Lowe), White & Case LLP
transferred and can be used for investment purpos - es”. This does not include the digital representation of fiat currency, securities or other assets. This aligns with the definition of virtual assets in the SCA Decision No 26/2023, relating to virtual asset platform opera - tors. The DVAL defines a virtual asset as “a digital representation of the value that can be digitally traded or transferred, or can be used as an instrument for exchange, payment or investment purposes, includ - ing virtual tokens, and any digital representation of any other value specified by the VARA in this regard”. Under the CBUAE’s RPSCS Regulation and SVF Regulation, virtual assets constitute “a digital rep - resentation of value that can be digitally traded, or transferred, and can be used for payment or invest - ment purposes”. Virtual asset tokens are also defined to mean a type of crypto-asset that can be digitally Crypto-assets are cryptographically secured digital representations of value or contractual rights that use a form of DLT and can be transferred, stored or traded electronically. The PTS Regulation defines a payment token as “a virtual asset that maintains a stable value by referencing the value of the fiat cur - rency it is denominated in or another payment token denominated in the same fiat currency”. Under its guidelines relating to the Regulation of Vir - tual Assets and Virtual Assets Service Providers, the CMA defines virtual assets as “a digital representation of value that can be traded or digitally transferred and can be used for investment purposes, and does not include digital representations of paper currencies, securities or other money”. traded and functions as: • a unit of account; and/or • a store of value. In “offshore UAE”, the DFSA regulatory regime cap - tures different types of tokens (defined as a crypto - graphically secured digital representation of value, rights or obligations, which may be issued, transferred and stored electronically, using DLT or other simi - lar technologies) to varying degrees, which include crypto tokens, non-fungible tokens (NFTs), investment tokens, security tokens and utility tokens. The FSRA
also regulates virtual assets, which it defines as a digi - tal representation of value that can be digitally traded and functions as: • a medium of exchange; • a unit of account; and/or • a store of value but does not have legal tender status in any jurisdiction. Under the FSMR, a virtual asset is: • neither issued nor guaranteed by any jurisdiction, and fulfils the above functions only by agreement within the community of users of the virtual asset; and • distinguished from fiat currency and e-money. 10.4 Regulation of “Issuers” of Blockchain Assets Requirements and conditions around the issuance of virtual assets are set out in VARA’s Virtual Asset Issuance Rulebook (the “Issuance Rulebook”). The Issuance Rulebook includes requirements that all persons in Dubai wishing to issue virtual assets must follow the categorisation framework for VA issuances, including: (i) category 1 VA issuances (including fiat- referenced virtual assets and asset-referenced virtual assets) which require a VARA licence; (ii) category 2 issuances, which do not require a VARA licence but require that placement or distribution be carried out through or by a licensed distributor; and (iii) exempt VAs (including certain non-transferable and closed- loop structures) which have no requirements prior to issuance. The issuer of a relevant virtual asset must, among oth - er things, comply with the requirements set out in the Issuance Rulebook, including publishing and main - taining a White Paper and a Risk Disclosure State - ment in accordance with the Issuance Rulebook’s disclosure requirements. In its guidelines relating to the Regulation of Virtual Assets and Virtual Assets Service Providers, the CMA regulates the provision of financial services related to the issuer’s offer and/ or sale of virtual assets or participation in the provision of these services.
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