In a bid to attract crypto companies to the country, the United Arab Emirates (UAE) is preparing to issue licenses to service providers of virtual assets by the end of this quarter, Bloomberg reported on Thursday. The UAE could become a crypto-friendly jurisdiction with the help of a national crypto licensing law.
Considering the approaches of the United States, the United Kingdom, and Singapore, Bloomberg reported that the UAE would take a hybrid approach. According to Bloomberg, the SCA and central bank will regulate, while regional financial centres will set day-to-day procedures on licenses.
Crypto license: All other applicants seeking to provide payment services want to obtain such licenses, except crypto exchanges. Licensing cryptocurrency exchanges themselves do not require US citizenship.
Furthermore, the official said that the UAE is building an ecosystem to support crypto mining- an industry that environmentalists and policymakers generally criticize because of its exorbitantly high electricity costs and greenhouse gas emissions.
In December, Dubai, one of the seven constituent emirates, announced that it would establish a favourable regulated zone for crypto service providers in the Dubai World Trade Center. Binance, the world’s largest crypto exchange, signed a cooperation agreement with the trade centre a day later.
In May 2020, Abu Dhabi’s International Financial Center, a finance hub and free-trade zone issued its first crypto exchange license to Matrix. In November 2021, three exchanges at the centre were fully operational, and three others were in the process of being launched, according to the financial hub’s regulation chief.
The Dubai Multi Commodities Center, the largest free-trade zone in the UAE, set up a regulatory framework in March 2021 for cryptocurrency firms. There are already 22 licensed companies, Bloomberg reports.
The UAE is gradually emerging as a new crypto hub in the Middle East. According to research firm Chain analysis, the UAE is the Middle East’s third-largest cryptocurrency market, with a transaction volume of $26 billion between July 2020 and July 2021.