The United Arab Emirates (UAE) has various free zones specialising in different trade sectors, with some of them taking an interest in regulating regulating virtual-assets service providers.
ADGM crypto license
Abu Dhabi Global Markets (ADGM) is a financial free zone located in the capital city of the United Arab Emirates, Abu Dhabi. Established in 2013, ADGM has been a pioneer in regulating and fostering the growth of innovative and technology-driven financial businesses and services in the region.
With its favorable regulatory environment and robust infrastructure, ADGM has become a hub for crypto asset-related businesses and activities in the Middle East and North Africa (MENA) region.
The ADGM operates as an independent jurisdiction with its own legal framework, regulatory framework and financial services infrastructure, providing a secure and transparent environment for the development of the crypto asset industry and promotes the growth of the sector in a responsible and sustainable manner, since 2018, being one of the first regulators in the world to provide a clear regulatory framework for crypto asset activities.
Its licenses allow the issuance, trading, custody, and management of crypto assets, crypto asset-related research and analysis, financial advice and consultancy on crypto assets, and providing technology solutions for crypto asset businesses.
Here are the activities that can be licensed by the ADGM:
- Crypto exchange license: A crypto exchange license allows a company to operate a platform that facilitates the buying, selling, and exchange of crypto assets. The license holder is required to comply with AML/CFT regulations, cybersecurity standards, and other relevant regulatory requirements.
- Crypto asset custodian: A crypto asset custodian is a regulated entity that provides secure storage and management of crypto assets on behalf of its clients. The custodian is required to comply with the ADGM's regulations on asset protection and cybersecurity.
- Managing other person's crypto assets: This refers to the activity of managing and administering crypto assets on behalf of clients, including carrying out transactions, maintaining records, and reporting to the relevant authorities.
- Providing custody of crypto assets: This refers to the secure storage and safeguarding of crypto assets on behalf of clients. The custodian must comply with the ADGM's regulations on asset protection and cybersecurity.
- Buying, selling, and exercising any right in accepted crypto assets: This refers to the buying and selling of crypto assets, as well as the exercise of any rights or options associated with the assets. This activity is subject to ADGM's regulations on fair and transparent trading practices.
- Marketing of crypto assets: This refers to the promotion and marketing of crypto assets to potential investors and clients. The marketing activities must comply with the ADGM's regulations on the dissemination of information and protection of investors.
VARA Framework
The Virtual Assets Regulatory Authority (VARA) is the sole authority regulating virtual assets across Dubai and is an entity registered under the Dubai World Trade Centre Authority (DWTCA) with the the responsibility of regulating and supervising virtual assets and virtual asset-related activities in all zones in Dubai, including special development zones and free zones, except for the Dubai International Financial Centre (DIFC).
DMCC crypto license
DMCC, or Dubai Multi Commodities Centre, is a government-owned free zone located in Dubai, United Arab Emirates. As a free zone, it provides a range of benefits to businesses operating within its jurisdiction, including tax-free status and 100% foreign ownership.
In recent years, DMCC has become known for its support of the crypto and blockchain industries, and offers a range of services for companies operating in this sector. These include:
- Distributed ledger technology services: DMCC provides a supportive environment for businesses developing and implementing blockchain-based solutions.
- Proprietary trading in crypto commodities: DMCC allows companies to trade cryptocurrencies and other crypto assets, providing a secure and regulated environment for these activities.
- NFTs E-marketplace provider: DMCC supports the growth of the non-fungible token (NFT) market, and provides a platform for businesses to create and operate NFT marketplaces.
- Metaverse services provider: With the increasing popularity of virtual and augmented reality experiences, DMCC is positioning itself as a hub for businesses providing metaverse services.
Overall, DMCC is seen as a leading hub for businesses operating in the crypto and blockchain space, offering a supportive and regulated environment for these industries to grow and thrive.
The DMCC is not directly subject to the rules and regulations of the Securities and Commodities Authority (SCA) of the UAE. As a government-owned free zone, DMCC operates under its own regulations and standards, which are set by the DMCC Authority.
However, it is important to note that DMCC still operates within the legal framework of the UAE, and therefore must comply with relevant national laws and regulations. The SCA, as the primary financial regulator in the UAE, plays an important role in ensuring the stability and security of the financial sector in the country, and businesses operating in DMCC may still be subject to certain SCA rules and requirements.
In addition, the DMCC Authority has established its own regulatory framework to ensure that businesses operating in the free zone comply with relevant regulations and standards. This includes rules and regulations related to anti-money laundering (AML) and counter-terrorism financing (CTF), as well as rules related to the trading of crypto commodities. By establishing its own regulatory framework, DMCC helps to ensure a secure and stable operating environment for businesses in the free zone.
DWTC free zone crypto license
The Dubai World Trade Centre (DWTC) is a free zone issuing crypto related licenses under supervision of Securities and Commodities Authority. The activities being offered are:
Here are some of the common cryptocurrency-related business activities that are allowed under the license issued by the DWTC:
- Cryptocurrency exchange: Operating a platform for buying, selling, and trading cryptocurrencies.
- Crypto-asset custody: Providing secure storage and management of digital assets for individuals and institutions.
- Crypto-asset management: Offering investment management services for digital assets, including portfolio management and risk management.
- Crypto-payment solutions: Providing payment processing solutions that support cryptocurrency transactions.
- Initial Coin Offerings (ICOs): Raising funds through the sale of tokens to investors.
- Distributed ledger technology (DLT) development: Developing and implementing blockchain solutions for businesses and organizations.
- Proprietary trading in crypto-commodities: Trading in cryptocurrencies as an investment activity.
- Cryptocurrency mining: Generating new units of cryptocurrencies by solving complex mathematical problems.
- Blockchain consultancy: Providing expert advice and support on all aspects of blockchain technology and its applications.
DAFZA crypto license
The Dubai Airport Freezone Authority (DAFZA) offers a license for proprietary trading in crypto-commodities, which allows companies to engage in the trading of cryptocurrencies and other digital assets. This license provides companies with a regulated and secure environment to operate in and also offers various benefits, such as access to a thriving business community, world-class infrastructure, and tax benefits. However, it's important to note that obtaining a DAFZA crypto license is a complex process and requires meeting certain eligibility criteria and fulfilling various regulatory requirements included the ones by the Dubai Financial Services Authority (DFSA).
The DAFZA license for proprietary trading in crypto-commodities allows companies to engage in the following crypto-related business activities:
- Crypto-commodities trading: This involves buying and selling cryptocurrencies and other digital assets, such as Bitcoin, Ethereum, and other altcoins.
- Crypto-wallet services: This involves providing secure storage solutions for cryptocurrencies, allowing customers to store, send, and receive digital assets.
- Crypto-payment services: This involves facilitating the processing of payments and transactions using cryptocurrencies, including converting cryptocurrencies into fiat currency or other digital assets.
- Crypto-custodial services: This involves providing secure storage solutions for institutional investors, such as hedge funds, asset managers, and other financial institutions.
- Crypto-asset management: This involves providing investment management services for cryptocurrencies, including portfolio management and risk management.
It's important to note that the regulatory requirements for each of these activities may vary, and companies must comply with the applicable laws and regulations, as well as the requirements set forth by the Dubai Financial Services Authority (DFSA).
DIFC free zone crypto license
The Dubai International Financial Centre (DIFC) is a financial free zone in Dubai that offers a range of services and facilities for financial institutions, including licensing for cryptocurrency businesses. The DIFC has its own regulatory framework, independent from the central government of the United Arab Emirates (UAE), which enables it to offer a more favorable environment for fintech and digital finance companies.
The DIFC Authority is the regulatory body responsible for licensing and supervising all financial institutions operating within the DIFC. In order to operate a cryptocurrency business within the DIFC, companies must obtain a license from the DIFC Authority. The process for obtaining a license includes a comprehensive assessment of the business, its management, and its operations.
To be noted that the Dubai Financial Services Authority (DFSA), which is the regulator for the DIFC, is the authority that has established the licensing framework for virtual asset service providers that sets out the requirements for obtaining a license to operate in the DIFC, to ensure the safety and soundness of virtual asset activities in the DIFC and to provide greater clarity and certainty for market participants. However, it's worth noting that while the licensing framework establishes standards for virtual asset service providers, it does not still directly regulate the crypto activities themselves.
The DIFC offers several types of licenses for cryptocurrency businesses, including a license for operating as a virtual asset exchange, a license for operating as a virtual asset wallet provider, and a license for providing virtual asset custody services.
Companies operating in the DIFC must comply with the DIFC's regulatory framework, which includes strict AML and KYC requirements. The DIFC also has a robust framework for ensuring the security and reliability of virtual assets held by licensees.
DIFC licences the following cryptocurrency business activities:
- Virtual Asset Exchange: A virtual asset exchange license allows companies to provide a platform for buying and selling cryptocurrencies and other digital assets.
- Virtual Asset Wallet Provider: A virtual asset wallet provider license allows companies to offer secure storage solutions for digital assets, such as cryptocurrencies.
- Virtual Asset Custody Service: A virtual asset custody service license allows companies to provide secure storage and management of digital assets for their clients.
- Virtual Asset Brokerage: A virtual asset brokerage license allows companies to facilitate the buying and selling of cryptocurrencies and other digital assets on behalf of their clients.
- Virtual Asset Management: A virtual asset management license allows companies to manage digital assets, such as cryptocurrencies, on behalf of their clients.
It is important to note that while the DIFC allows these cryptocurrency business activities, they are still subject to strict regulations and oversight by the DIFC Authority. This includes requirements for anti-money laundering (AML) and know-your-customer (KYC) compliance, as well as robust security measures to ensure the safety of digital assets.
Conclusion
These are just some of the many business activities related to cryptocurrencies that are allowed under the license issued by the different UAE Authorities.
However, it's important to note that the regulatory environment for cryptocurrency-related businesses is constantly evolving, and the specific activities allowed may change over time.
