UAE mandates VASP licenses for crypto firms, begins accepting applications

UAE’s financial watchdog announced on April 17 that it has begun accepting applications from companies seeking a virtual asset service provider (VASP) license.

The UAE Cabinet established a framework to regulate the crypto industry in December 2022 after passing Resolution 111.

Under the new regime, all companies looking to provide services related to virtual assets in the country must register with the country’s financial regulator and secure a VASP license.

However, firms operating within Dubai’s financial free zones are exempt from having to apply for a VASP license for now.

SCA

The Securities and Commodities Authority (SCA) was appointed to supervise the crypto sector in the UAE, which has historically held a pro-crypto stance and remains at the forefront of regulating the emerging industry.

Its oversight will have minor overlap with the Virtual Assets Regulatory Authority (VARA), which will continue to be in charge of crypto firms operating in Dubai and its financial free zones like the Dubai International Financial Centre (DIFC).

The VASP license will bring companies under the SCA’s net, which will mandate them to adhere to various regulatory requirements related to business disclosures, operational integrity, consumer protection and transparency.

The SCA said companies must turn over any and all documents and data requested during the licensing process and will be subject to disclosure requirements.

If an application is rejected, companies will have the option to appeal the decision.

Additionally, the SCA will regulate all cryptocurrencies and digital assets used for investment purposes. However, this will not include digital assets used for payment purposes, which will fall under the central bank’s purview, according to the regulator.

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