Dubai Bans Privacy Cryptocurrencies with New Regulations

Dubai aims to become a hub for virtual assets by attracting 500+ crypto companies and creating a favorable regulatory environment.

dunes and dead tumbleweed rolling around in the foreground of the Dubai skyline
  • Dubai aims to become a hub for virtual assets by attracting more than 500 cryptocurrency companies to its digital asset ecosystem.
  • Dubai is committed to ensuring a transparent and secure environment for virtual asset transactions, making it an attractive destination for companies in the industry.
  • The regulations will apply not only within Dubai but also to its special development zones and free zones.

Dubai is positioning itself as a hub for virtual assets by attracting more than 500 cryptocurrency companies to its digital asset ecosystem. The city’s Virtual Assets Regulatory Authority (VARA) aims to create a favorable regulatory environment, giving Dubai an edge over local competitors and establishing it as a regional and international hub for virtual assets.

VARA Releases Its Regulation Guidelines

The Virtual Assets Regulatory Authority (VARA) of Dubai released its much-anticipated regulation guidelines for the local cryptocurrency industry on Tuesday, February 7th, 2023. The guidelines establish ten core principles for the industry, including licensing requirements, anti-money laundering obligations, marketing protocols, and a ban on anonymity-enhanced cryptocurrencies, such as Zcash and Monero.

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Dubai defines anonymity-enhancing cryptocurrencies as “a type of virtual asset that hinders the tracing of transactions or ownership through its use of distributed public ledgers, and for which there are currently no available technologies or mechanisms for service providers to trace or identify ownership.” Due to the anonymous nature of these cryptocurrencies, the government has put in place regulations to oversee their use and transactions.

Per the regulations, virtual asset businesses must obtain a license from VARA, and large proprietary traders investing a minimum of $250 million in cryptocurrencies must register with the authority. The VARA also has the power to revoke licenses in the event of a violation of directive or insolvency and set fees for services provided.

Violations of the regulations can result in fines of up to $5.4 million for individuals and $13.6 million for businesses involved in virtual assets. The VARA’s regulations will apply not only within Dubai but also to its special development and free zones, excluding the Dubai International Financial Centre, which another body regulates.

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Dubai is determined to establish itself as a leading destination for virtual assets by offering a supportive regulatory framework to attract businesses to the city. Despite the demanding due diligence process, the city is committed to ensuring a transparent and secure environment for virtual asset transactions, making it an attractive destination for companies looking to enter the industry. 

On the Flipside

  • The licensing process for virtual asset businesses in Dubai can be lengthy and complicated
  • With the launch of the 500 cryptocurrency companies in Dubai, the country has taken another step toward becoming a hub for virtual assets.

Why You Should Care

Regulations set standards for the industry, ensuring that virtual asset businesses operate transparently and securely, which can attract more investments and drive innovation in the crypto space. Understanding the impact of these regulations is crucial for the growth and stability of the crypto market.

For news on Dubai taking steps to become a virtual assets hub:
Dubai Aims To Become Metaverse Capital Of The World – DailyCoin

For a comparison on virtual asset regulation, check out:
Will the UK Be the First Country to Successfully Regulate Cryptoassets? – DailyCoin

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Kyle Calvert

Kyle Calvert is a cryptocurrency news reporter for DailyCoin, specializing in Ripple, stablecoins, as well as price and market analysis news. Before his current role, Kyle worked as a student researcher in the cryptocurrency industry, gaining an understanding of how digital currencies work, their potential uses, and their impact on the economy and society. He completed his Masters and Honors degrees in Blockchain Technology within Esports and Business and Event management within Esports at Staffordshire University.