Virtually Everything | Episode 2 | The Regulatory Landscape in the UAE

This is the second episode of the Clyde & Co Virtually Everything podcast series, in which hosts, Lucy Nash and Vyasna Mahadevey explore the dynamic world of virtual assets around the world. Here, the hosts delve into the complex regulatory regime for virtual assets in the UAE and why it has become such a destination for virtual assets businesses.

Untangling a web of virtual assets regulation in the UAE

Lucy and Vyasna begin by outlining the five regimes with power to regulate virtual assets in the UAE, plus how a company might choose which licensing route best suits their needs. They move on to discuss current and likely future developments of the virtual assets landscape in the region and, to conclude, Lucy provides her perspective on how regulatory change is impacting the disputes environment. 

The UAE has become known as a key virtual assets hub, and this is in large part due to the Virtual Assets Regulatory Authority (VARA), introduced in 2022. However, as Vyasna explains, there are four other avenues for crypto regulation in the UAE. These are the Securities and Commodities Authority (SCA), the Central Bank, plus two financial free zones, which are treated as separate jurisdictions.

As things stand, each regulatory authority approaches virtual assets in a slightly different way. For example, the SCA regulates and licenses virtual assets exchanges, brokerages and custodial services, while the Central Bank is unique in covering crypto payments services and VARA enables licensing for staking services. Vyasna stresses that these distinctions may simply be a consequence of the speed of regulatory change, rather than by design, saying: “…all of the regulators in this region have made it abundantly clear that their respective regulations are under constant development to keep up with international trends”. 

When it comes to deciding which regulator is right for a company, while the regulatory focus is a key consideration, Vyasna mentions several other factors, including licensing requirements, the process of licensing, and costs, which can all vary. Lastly, Lucy provides the disputes perspective, observing that “as more regulations or amendments to regulations are released… that comes with more risk that those regulations might be breached.” She notes that VARA has already released warnings and enforcement notices to that effect. 

Tune in next time when Virtually Everything will review the first cryptocurrency case to go through the DIFC courts, and the ramifications for businesses in the future. 

This podcast forms part of the Virtually Everything podcast series. To find out more about the topics discussed in the series, please visit our dedicated Digital Assets and Blockchain page.