The Council of Ministers issued a decision regarding the regulation of virtual assets and service providers in the UAE, which will enter into force as of January 11.
The decision aims to develop the legislative system for the virtual assets sector in the country and its related activities and service providers, to ensure the rights and duties of all parties.
The decision aims to regulate the virtual assets sector in the country and its related activities and service providers, and the compliance of the virtual assets sector in the country with regard to confronting money laundering crimes and combating the financing of terrorism and financing illegal organizations, its amendments, its executive regulations, and the applicable legislation related to the sector, and supporting the efforts of the state to provide the environment Attractive investment for international companies and institutions operating in the virtual assets sector, to provide their services in the country, and to protect investors in virtual assets from illegal practices.
subject to the decision
The provisions of the resolution apply to the virtual assets sector in the country, including free zones, and activities related to virtual assets in the country, including free zones, as set forth in Article (5) of this resolution, and virtual asset service providers in the country, including free zones.
The provisions of this decision do not apply to:
- Regulating virtual assets that take place within the financial free zones, and all operations associated with them.
- Digital securities and digital commodity contracts, which are subject to the respective regulations issued by the Securities and Commodities Authority.
- Virtual assets for payment purposes including stored value facilities which are subject to the jurisdiction of the Central Bank, except those approved by the Central Bank for listing and trading for the purposes of investment in the Virtual Asset Platform.
provisions of the law
- – It is prohibited for any person to engage in virtual asset activities in the country, without obtaining approval and a license from the Authority or the local licensing authorities, as the case may be, in accordance with the provisions of this decision. According to one of the legal forms approved by the local authorities concerned with commercial licenses.
- – A person wishing to engage in virtual assets activities must obtain the necessary preliminary approvals and permits from the Authority or the local licensing authorities – as the case may be – before proceeding with the licensing procedures from the local authorities concerned with commercial licenses.
- It is prohibited to deal with any person who engages in virtual assets activities in the country, unless he is licensed by the Authority or the local licensing authorities – as the case may be – in accordance with the provisions of this decision.
- Excluded from the text of this Article are virtual assets intended for payment purposes and which are subject to the jurisdiction of the Central Bank.
- – Providing operation and management services for virtual asset platforms, and providing exchange services between one or more forms of virtual assets.
- – Providing services for the transfer of virtual assets, providing brokerage services in trading operations in virtual assets, providing services for safekeeping and managing virtual assets and enabling control over them, and providing financial services related to the issuer’s offer and / or sale of virtual assets or participating in the provision of those services.
– The Securities and Commodities Authority is obligated to verify the availability of requirements when granting licenses to virtual asset licensing providers, as the license applicant or one of its partners must not be included in the sanctions lists or terrorism lists issued by the official authorities in the country or international organizations recognized by the UAE. Before the state, especially those concerned with countering money laundering and combating the financing of terrorism and illegal organizations, and not to be subject to any criminal investigations inside or outside the country during the submission or study of the registration application, and not to have a final judicial ruling against him in the crime of money laundering or financing of terrorism or financing of terrorism illegal organisations.
- The efficiency of the technical systems used by the providers of virtual assets services and their ability to protect investor data in accordance with international best practices, current technology and/or cybersecurity standards, and the fulfillment of the requirements and conditions of capital and credit guarantees by the providers of virtual assets services.
- – The Authority is obligated to verify, through setting up inspection programs and control procedures, that the following requirements are met when virtual asset service providers engage in virtual asset activities.
- – The obligation of virtual asset service providers to provide their services to investors in accordance with the provisions of this Resolution and the decisions issued pursuant thereto, and to disclose to them all risks related to those services in a clear, fair and non-misleading manner.
- – Compliance of virtual asset service providers with the provisions and requirements contained in Federal Decree-Law No. (20) of 2018 regarding countering money laundering crimes, combating the financing of terrorism and financing illegal organizations and its implementing regulations, as well as the requirements of the Financial Action Task Force (FATF), in particular the provisions and requirements related to assets virtualization and its service providers.
- – Providing an effective mechanism that obliges the providers of virtual assets services to notify the Authority and the concerned authorities in the event that the services provided by them are exposed to security risks, security breaches, or any behavior that falls under cybercrime.
- – Legislations must be adhered to in combating money laundering, combating the financing of terrorism and financing illegal organizations, as all providers of virtual assets services in the country must comply with the applicable legislation on anti-money laundering, combating terrorism and financing illegal organizations and the decisions issued in implementation thereof.
Violations and penalties
- – Directing the warning.
- – Suspension of the process of listing or trading virtual assets.
- – Stopping the technologies used by service providers related to virtual assets and adopting alternative means.
- – Stopping or preventing the operation of the virtual assets platform, and seeking the help of the concerned authorities in the country to implement this.
- – Suspension of any virtual asset service providers from practicing their activities or revoking their license in accordance with the provisions of this resolution.
- – Stopping any activity that is practiced without a license in accordance with the provisions of this decision, and preventing any natural person from carrying out any tasks or work related to it without his approval from the Authority, and the Authority may seek the help of the competent authorities to implement its decisions or close the violating headquarters.
- Imposing a fine not exceeding ten million dirhams.
- – Imposing a financial fine equal to the value of the profits obtained from the violation or the losses that were avoided.
- Referring the violator of the provisions of this decision to the Public Prosecution.