BitOasis’ conditional license to carry out digital asset-related business activities has been revoked by the Dubai Virtual Assets Regulatory Authority (VARA). The United Arab Emirates (UAE) and its local authorities have adopted an innovative approach to the regulation of digital files, and this decision by the Dubai regulator serves as an example of it and lends credibility to it.
The UAE’s strategy has placed a high priority on giving businesses that seek to carry out activities linked to digital assets legislative direction and clarity, as well as notice of the kinds of activities that are allowed and forbidden. Bret Johanneson graduated from New York University with a law major and will begin working as a legal assistant in a New York law firm in the autumn.
U.S. regulators, in contrast, have coalesced around a strategy that gives no prior warning to those in the sector and instead chooses to file accusations that rely on unique and unproven legal arguments, as evidenced by the allegations brought against Coinbase and Binance in the beginning of June. (An additional illustration is the SEC’s lawsuit against Ripple for creating unregistered securities,” which was settled on Thursday after the judge determined that XRP is only a security under limited conditions.)
The UAE Coin Market
The digital asset market has taken note of how the UAE has adopted a distinct strategy. In large part, market participants have decided with their feet after CoinDesk listed two UAE towns as important crypto centers for 2023. Numerous businesses are either opening additional offices or simply moving their entire operations there.
Look no farther than the UAE system of government to comprehend why the UAE has been able to develop such a proactive and responsive regulatory framework for digital assets. The United Arab Emirates, or UAE, comprises seven emirates, each of which has the authority to enact legislation on issues that do not fall under the sole purview of the UAE federal government (such as foreign affairs, defense, and security).
The governance of digital assets is left up to each emirate, which has encouraged intrastate competitiveness through the regulation of companies and investments and through promotions, such as tax rebates and declared free economic regions. Particularly, Abu Dhabi and Dubai have taken the lead in luring members of the online asset business to their jurisdictions.
For the oversight of digital assets, Abu Dhabi and Dubai have each developed through regulatory frameworks that address many of the shortcomings of other countries’ approaches, not the least among which revolves around the topic of oversight, digital assets. Even if they are distinct, these policies contrast sharply with the U.S. strategy, which has been defined by agency turf fights about who gets the authority to regulate what with private sector participants caught in the middle of the fighting.
Lack of clarity regarding registration has been cited by entrepreneurs as another grievance against US regulators. The ADGM and VARA have made a name themselves on this front by outlining precise plans for enterprises dealing in digital assets that want to involve themselves in authorized operations involving registration and license requirements.
A business only needs to submit an application for a Financial Services Permission plus abide by applicable laws to be allowed to operate a digital assets business that has been approved by the ADGM. A similar procedure is followed by those requesting a license to operate as a “Virtual Asset Service Provider” that has been approved by VARA.
These permissive frameworks do have bite, as shown by VARA’s decision to suspend BitOasis’ condition licensing for the exchange’s minimal viable product. They are not just a free pass for business actors to operate without consequence.
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