Sheikh Mohammed Bin Rashid Al Maktoum Signs The First Law Regulating Digital Assets (Dubai Law No.4 Of 2022 DVAL) – The Dubai Virtual Assets Law: Dubai Digital Transformation Continues.
The Emirate of Dubai adopted its first cryptocurrency law on 11 March 2022 and established a one of kind body to regulate virtual assets such as Bitcoin. The new law defines “Virtual Assets” in its article 2 as:
“a digital representation of value that can be digitally traded, transferred or used as an exchange or payment tool or for investment purposes, including Virtual Tokens, and any digital representation of any other value determined by the Authority in this respect”.
The Emirate of Dubai has made it a priority to be a world leader in digital transformation and to enhance the security of the investors in a fast-moving digital currency environment. Thus, the Dubai Virtual Assets Regulatory Authority will be working to promote security and transparency for crypto investors and ensuring that their data remain secure and safe with the service providers. The newly established authority will be tasked with regulating the sale of virtual assets such as cryptocurrency as well as authorizing asset service providers in the UAE. The competent authority will be independent but to ensure a better protection for the investors it will be linked to the Dubai World Trade Centre Authority. The work of the authority will include but not limited to ensuring the safeguard of data, anti-money laundering checks, educating and raising public awareness of the risks involved when dealing with virtual assets. This law is a step into data protection and more specifically in the fintech industry.
The law is expected to go into effect across the Emirate except for the Dubai International Financial Centre (DIFC), which is a special economic zone under the wing of the Dubai Financial Services Authority (DFSA). Also, the new law does not intend to regulate services related to virtual assets on a federal level, but it will be mainly promulgated for the Emirate of Dubai.
In addition, the new law restricts the services related to virtual assets to providers who have obtained a prior authorisation from the Virtual Assets Regulatory Authority to operate only in the Emirate of Dubai and have been granted a trade licence from the relevant commercial authority in Dubai to provide such activities in line with Article 16. The providers will be controlled and any breach of provision of the law will expose them to penalties, fines and a possible withdrawal of the authorisation.
Further announcements will be made by the Regulatory Authority in the coming weeks.