On January 15th, 2023, a new regulation for virtual assets and virtual asset service providers will come into effect in the United Arab Emirates (UAE), adding an additional layer of oversight to the country's virtual asset sector.
The regulation, issued by the UAE Cabinet, aims to both protect investors and supervise the industry, recognizing the perceived risks posed to investors in virtual assets.
Local sources state that the regulation also includes provisions for penalties for breaching the rules, ranging from a warning and suspension of the listing or trading of virtual assets to revocation of the license and a fine of up to $2.7 million.
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However, this is not the first regulation from the United Arab Emirates regarding virtual assets and its service providers. They also introduced a virtual asset regime and established the Virtual Asset Regulatory Authority (VARA).
Previously, supervisory initiatives for virtual assets were introduced in specific parts of the UAE, such as the financial free zones Abu Dhabi Global Market (ADGM) and the Dubai International Financial Centre (DIFC).
The UAE Cabinet also stated that this regulation will support efforts to provide an attractive investment, economic and financial environment for international companies and institutions operating in the virtual assets sector to provide their services in the country.
According to multiple sources, the decision made by the UAE Cabinet to implement a new regulation for virtual assets and service providers is a positive development that was to be expected. Given the significance and level of risk involved in the UAE's virtual asset sector, it is also expected that federal-level regulations would be established to oversee it.
In other news related to crypto regulations, Australia is planning to improve crypto-related regulations and rules for its service providers in 2023.