As a part of the United Arab Emirates, the emirate of Dubai has added a new dimension to its appeal. A new law has been passed to make it easier for entrepreneurs to obtain crypto license s, in addition to its reputation as a tax haven. As the global financial system strives to give credibility to virtual assets, this is a deal breaker for everyone. The new Law No. (4) of 2022 Regulating Virtual Assets in the Emirate of Dubai was published in Dubai’s Official Legal Gazette on March 11, 2022, and took effect immediately.
What Does The Law Provide?
For the first time, the law has set up a public corporation called the “Dubai Virtual Assets Regulatory Authority.” This public corporation, which is linked to the Dubai World Trade Center Authority, is in charge of developing regulations, rules, and standards for regulating, supervising, and overseeing Virtual Asset Platforms, Virtual Asset Service Providers, and all other Virtual Asset-related issues.
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Accordingly, the law provides that:
- No one can do anything crypto-related in Dubai without getting a permit from VARA.
- Foreign-registered companies can’t get the permit without first setting up a local business in Dubai. That is, the business must have one of the legal forms approved by the Dubai commercial licensing authority.
- VARA must first give the person who wants to start a business in Dubai permission to do so. Then the person can go to the right commercial licensing authority in Dubai and register the business.
- In general, the law says that crypto-related activities can only be done if they meet the requirements, rules, and regulations in the Permit.
What Activities Qualify To Be Issued A Permit Under The New Law?
People who do any of the following things need a permit from VARA, who is supposed to keep an eye on them:
- Operation and management of the Virtual Asset Platform
- Providing services to help people trade virtual assets for money in their own country or in another country, that is Virtual Assets exchange services
- Services that allow you to exchange one or more types of Virtual Assets for another type.
- The service of transferring virtual assets
- Virtual Asset storage, management, or control service
- Service for Virtual Asset Wallets
- Services related to the sale and purchase of Virtual Tokens.
However, it must be noted that VARA is given the far-reaching power to expand or prohibit any activity it deems fit.
How Will The Permit Be Issued?
According to the new law, a crypto Permit will be given out in accordance with the law and the rules and procedures approved by the Director General of VARA.
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VARA is yet to issue out any rules and procedures as of now.
What If A Person Desires To Acquire An Existing Permit?
The law does not prohibit the acquisition, assignment or transfer of an already existing permit provided the consent or approval of VARA is sought. To get this approval, VARA will follow rules and conditions set out in the Director General’s resolution on the matter.
Can A Permit Issued Under The Law Be Suspended Or Revoked?
The law authorises VARA to:
- Suspend the Permit for up to six (6) months.
- Revoke the Permit and work with the competent commercial licensing authority in Dubai to get the commercial license taken away.
The permit could be suspended or revoked if the permit holder does anything that is against public policy, or if they break the law and any resolutions issued by VARA.
How Much Does The Permit Cost?
The official fees have not been fixed, but VARA is empowered under the law to collect fees, commissions, and charges necessary to procure the license. It is expected that VARA will announce the fees in due time.
How Are Grievances Resolved Under The Law?
Any person who is affected by a decision, action, or measure made under the law or the resolutions made under the law can make a written complaint to the Director General of VARA within 30 days of being told about the decision, action, or measure in question.
A committee set up by the Director General for this purpose will decide the grievance in fifteen (15) days. The decision made by the committee on the grievance will be the last one.
Why Should Crypto Startups In African Care About The New Law In Dubai?
Most African countries are unfriendly to crypto companies. For example, the Central Bank of Nigeria recently blocked Nigerian banks from banking crypto companies, forcing startups such as Patricia, Bitfxt, to relocate abroad.
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Moving to Dubai would almost certainly allow African crypto startups to flee predatory regulations and set up crypto-linked bank accounts that would help them run their businesses.
If you are an African startup that wants to set up shop in Dubai under the new law, please contact the writer below via udoh@progressionlawfirm.com or here.
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Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard. You can book a session and speak with him using the link: https://insightsbyexperts.com/view_expert/charles-rapulu-udoh