UNITED ARAB EMIRATES Law and Practice Contributed by: Stuart Paterson, Janine Mallis and Tania Forichon, Herbert Smith Freehills
CAAR Crypto-assets are regulated in the UAE under Securities and Commodities Authority Deci - sion No 23/RM/2020 Concerning Crypto Assets Activities Regulation (CAAR): • crypto assets are defined as records within an electronic network that function as mediums for exchange, units, representations of own - ership, economic rights, or access or utility rights and can be transferred electronically; • the CAAR regulates the trade of crypto-assets and the licensing of companies carrying out financial activities related to crypto-assets, which attract enhanced anti-money launder - ing and monitoring obligations (for example, under Article 21, additional screening must be carried out where unverifiable geographical locations are used or the identity of users is designed to be hidden); and • the CAAR does not apply to state-issued crypto-assets or digital currencies that the UAE Central Bank already regulates. VARA In Dubai, Law No 4 of 2022 was issued on 11 March 2022, establishing the Dubai Virtual Asset Regulation Authority (VARA), the world’s first independent regulator of virtual assets, aiming to enable and promote the use of virtual assets
in the emirate. On 19 September 2023, VARA published the Virtual Assets and Related Activi - ties Regulations 2023 (the “2023 VA Regula - tions” ), which set out a comprehensive virtual assets (VA) framework built on principles of eco - nomic sustainability and cross-border financial security. The 2023 VA Regulations include regu - lations applying to all VA providers and activi - ty-specific regulations. VARA also issued new Marketing Regulations, which came into effect on 1 October 2024. These Regulations apply to businesses wishing to market virtual assets and related activities in the UAE. DIFC and ADGM On 1 November 2022, the Dubai Financial Ser - vices Authority (DFSA) introduced a new frame - work for regulating financial services using cryp - to-tokens in the DIFC. DFSA firms can provide a range of financial services using crypto-tokens. The ADGM regulates crypto-assets under the Financial Services and Markets Regulations 2015. In March 2024, the DIFC enacted its new Digital Assets Law (Law No 2 of 2024), which set out the legal characteristics of digital assets for property law and how they may be controlled, transferred and dealt with by parties.
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