The United Arab Emirates is planning to grant federal licenses to Virtual Asset Services Providers (VASPs) before legalizing digital assets. Per reports, it plans to grant these licenses before the end of March to attract blockchain platforms to establish their operations there.
UAE To Adopt Cryptos Through VASPs Licensing
The United Arabs Emirates plans to entice crypto firms to establish their services there via handing out licenses. The move may be the first of its kind in the region. The country’s Security and Commodities Authority is in the final phases of drafting a regulatory framework. An inside source said that the framework targets welcoming VASPs in the country.
UAE eyes to transform Dubai and the Middle East into a cryptocurrency hub through a working regulatory framework. They have come up with licensing plans to make the crypto firms and investors more confident in their commitment to supporting upcoming technologies.
Per the report, the agencies involved in drafting the rules used the Financial Action Task Force’s standards and the current BTC regulations in the US. It also investigated the regulatory developments in other nations, including the UK and France.
The UAE has developed a hybrid regulatory structure after considering all the crypto regulatory frameworks from selected authorities and related rules. The SCA and the Central Bank will monitor the governance of crypto-related regulations.
Additionally, all global financial centers that work with the UAE will be free to set their daily licensing protocols. The UAE government is also setting up rules for crypto mining.
Crypto Adoption in UAE and the Middle East
The UAE authorities plan to introduce a regulatory system that will increase the accessibility of the crypto space to its citizens. The recent proposal on digital assets and crypto mining targets to help achieve the target. It also wants to mitigate financial crimes that have been a threat to its administration for a long time.
Soon, the FATF is set to reveal whether it will include UAE in its grey list of countries with too high money laundering and financial terrorism levels. Now the country wants to improve its ratings in all ways possible. It is the third-largest crypto market in the Middle East, falling behind Turkey and Lebanon.
Per data from Chainalysis ranging from July 2020 to June 2021, UAE had a transaction volume of $26B. These statistics place it as one of the most active crypto markets globally and risky due to its unregulated nature. Following leaks regarding the regulation of cryptos in the UAE, VASPs are moving in steadily.
Per reports, Binance has already introduced a local team in the country. Other regional exchanges like CoinMENA BSC and Rain Financial Inc. have also made their presence known there. In the meantime, US exchange Kraken is on a mission to recruit a Middle East North Africa CEO in Abu Dhabi. This development shows that the country’s plan to lure VASPs is already working.
Other countries in the Middle East should also follow in the footsteps of the UAE and fully regulate cryptos to mitigate financial foul play. A proper regulatory framework will also attract new adopters as crypto frauds will be driven off, thus boosting investors’ confidence in the assets.