The United Arab Emirates (UAE) is preparing to start issuing federal licenses to cryptocurrency service providers in the first quarter. UAE crypto regulation will take a hybrid approach. The government hopes that a nationwide crypto licensing system will attract big companies to the region.
UAE Prepares to Regulate Crypto Sector Nationwide
The United Arab Emirates (UAE) is preparing to begin issuing federal licenses to virtual asset service providers (VASPs) by the end of the first quarter, Bloomberg reported Thursday, citing an unnamed government official.
The UAE Securities and Commodities Authority (SCA) is in the final stages of amending legislation to regulate VASPs. The government hopes that a nationwide crypto licensing system will attract big companies to the region.
The country completed a risk assessment of crypto assets late last year. The assessment involved 14 public sector agencies and 16 private sector entities. The government has concluded that proper regulation, rather than outright prohibition, can mitigate the risks of cryptocurrencies being used in illicit finance schemes.
The UAE official told the outlet that the country’s crypto regulations take into account the latest Financial Action Task Force (FATF) guidelines as well as regulatory strategies used in the US, UK and Singapore.
The regulation will take a hybrid approach. The SCA will regulate the crypto industry with input from the central bank. Local financial centers may establish their own day-to-day licensing procedures. The UAE official said the government also wants to regulate the crypto mining industry.
Some of the financial free zones in the UAE have already issued licenses for VASPs. In December, Binance signed an agreement with the Dubai World Trade Center Authority to establish a global crypto hub.
What do you think of the UAE setting up a licensing regime for the crypto industry? Let us know in the comments section below.
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