According to reports, the United Arab Emirates plans to issue a federal cryptocurrency license for virtual asset service provider (VASPs), by the end the first quarter.
Bloomberg reported that the Securities and Commodities Authority in UAE (SCA), is currently in the final stages in finalizing legislation that would allow digital asset companies to establish base in the country. UAE would benefit from a national crypto licensing law to help it achieve its goal of becoming a crypto-friendly jurisdiction.
For the purpose of drafting its crypto license legislation, the regulators considered the Paris-based Financial Action Task Force guidelines as well as ongoing crypto policies in the United States and United Kingdom. According to reports, the new crypto license will be a hybrid approach in which the central regulatory body would oversee regulations while local financial institutions could develop their own license guidelines.
The UAE government plans to regulate the crypto mining industry, in addition to the crypto license.
Cointelegraph previously reported that UAE regulators are working to create laws that will allow crypto and blockchain adoption. One step closer could be the newly announced crypto licensing and mining legislation. In December 2021, Dubai World Trade Centre was declared a regulatory body for cryptocurrencies and a comprehensive zone by the government.
Related: Dubai regulator announces new regulations regarding investment tokens
Binance, one the largest crypto exchanges, is now eyeing the UAE market after it signed an exclusive memorandum o’ understanding (MOU), with the DWTC in Dec. Binance would help to make the DWTC a crypto-hub in the region, and also provide assistance to crypto exchanges and service provider to gain access to the UAE market.
>> Dubai World Trade Centre to become comprehensive zone and regulator for virtual assets and Crypto https://t.co/Ndr6GDcJ4u
CZ Binance (@cz_binance), December 20, 2021
The legal framework for crypto licensing is expected to be in place by the end the first quarter. However, UAE has many free zones that have relaxed taxation and regulatory rules.
These zones were among the first countries to implement tokenized security regulations as well as digital asset regulations. Abu Dhabi Global Markets (ADGM), a financial services regulatory authority (FSRA), was the first to implement digital asset regulations in 2018.