Regulating the crypto industry in the United Arab Emirates (UAE) requires a careful approach to selecting legal and regulatory frameworks. Founders who view licensing as a critical part of their strategy are more likely to succeed.
Two Legal Systems of the UAE
The UAE consists of seven emirates with two distinct legal systems. The 'onshore' regime covers the entire country, including over 45 economic free zones which operate under civil law. Financial free zones, such as Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC), operate under English common law and have their own regulatory bodies.
Five Crypto Regulators
In the UAE, the crypto ecosystem is regulated by five distinct authorities:
1. Central Bank of the UAE: regulates stablecoins, crypto payments, and transfers. 2. Securities and Commodities Authority: oversees crypto exchanges and token offerings. 3. Dubai Virtual Assets Regulatory Authority (VARA): governs most virtual asset service providers in Dubai.
ADGM and DIFC also have separate regulatory authorities for financial free zones.
Choosing the Right Regulator
The choice of jurisdiction depends on the specific business model. For those planning to launch a crypto exchange, licenses from VARA, SCA, or ADGM will be necessary. Issuing a stablecoin requires interaction with the Central Bank of the UAE. It's critical to select the correct regulator to avoid missed opportunities or licensing failures.
Building a business in the UAE requires careful attention to regulatory structure as a key element of go-to-market strategy. Success demands thorough assessment of requirements and proactive engagement with regulators.
