UAE Securities Authority completes consultations on virtual asset regulations

The UAE Securities and Commodities Authority (SCA) has come closer to issuing the regulatory and supervisory framework related to virtual assets issued for investment purposes. As per their press release, UAE SCA has also completed its consultation with the concerned authorities in the UAE in developing the necessary regulatory framework to address the risks of money laundering and terrorist financing related to virtual assets and virtual asset service providers in the United Arab Emirates, in order to ensure that the virtual assets sector adheres to the recommendations and requirements of the Financial Action Task Force (FATF).

 As per the statement, the Securities and Commodities Authority is the sole authority in the UAE mainland – except the financial free zones, ADGM ( Abu Dhabi Global Market) and DIFC ( Dubai International Financial Center) for  licensing, supervising and overseeing the virtual assets activities and services  issued for investment purposes (not virtual assets issued for payment purposes) as well as monitoring the compliance of the licensees by the Authority with the recommendations and requirements of the Financial Action Task Force (FATF) and in accordance with Federal Decree No. 20 of 2018 on Anti-Money Laundering and Countering the Financing of Terrorism and Illegal Organizations and its amendments and implementing regulations.

Crypto or virtual asset Exchanges licensed by the Authority and local competent authorities in the mainland can apply for a license for virtual assets exchange subject to the approval and complying to all regulations and procedures of the Authority.

On the other hand, the Authority notifies, that any person wishing to conduct a virtual assets services provider business in the mainland must obtain an initial approval from the Authority, in accordance with the Regulations Manual of the Financial Activities (the licensing rulebook), before obtaining a commercial license from the competent authority.

The UAE SCA Authority stated that it notifies the virtual asset service providers who have commercial licenses and they are providing any virtual asset services, to apply to the Authority to obtain the necessary license to practice such activity and also to confirm their obligation to comply with all legislation related to anti-money laundering controls in the country regarding virtual assets.

 The Securities and Commodities Authority looks forward to the cooperation and participation of all entities and concerned parties in establishing the protective compliance in accordance with the legislation, aiming to:

Enable innovation through progressive regulations based on principles of due diligence and agility;Using protocols to effectively reduce financial fraud and criminal activity by powerful real-time tracking;Ensuring compliance with FATF directives on combating money laundering and terrorist financing;Encouraging risk mitigation through awareness and training, disclosure, management, and governance;Conducting proportionate and deterrent supervision; and ensuring compliance with FATF requirements by participants.

 The Securities and Commodities Authority confirms that breach of the aforementioned regulatory and supervisory framework shall be subject to appropriate legal and supervisory actions.

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