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Dubai’s new virtual assets law will lead to increased investments by firms already in the crypto industry

Dubai’s new virtual assets law is meant to provide a regulatory framework for businesses dealing with cryptocurrencies in various formats be it security tokens, DeFi projects and NFTs, Nadim Bardawil tell Arabian Business.

Dubai’s new virtual assets regulatory law – and the corresponding new virtual assets regulatory authority (VARA) that has been launched to regulate, supervise, and control virtual asset services – is likely to lead to an increase in investments by companies already in the crypto industry, from an institutional perspective.

In his capacity as the Ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum, launched the Dubai Virtual Asset Regulatory Authority (VARA), which will set the rules and controls that govern the conduct of virtual assets activities, including management, clearing, and settlement services, as well as classifying specifying types of virtual assets.

Sharing his reactions, partner Nadim Bardawil, said: “We do see an increase in investment locally by companies already in the cryptocurrency industry, such as service providers, intermediaries, and issuers of cryptocurrency-related financial products.”

The legislation is meant to provide a regulatory framework for businesses dealing with cryptocurrencies in various formats be it security tokens, DeFi projects and NFTs.

This week, Arabian Business reported that the world’s leading blockchain and cryptocurrency infrastructure provider, Binance, had been granted a Virtual Asset License to enable it to operate within Dubai’s ‘test-adapt-scale’ virtual asset market model as a base for expansion into the region.
With the license, Binance will be permitted to extend limited exchange products and services to pre-qualified investors and professional financial service providers. It will also be able to anchor a blockchain technology hub in the Dubai World Trade Centre, to seed new talent, and build a vibrant blockchain ecosystem.

Bardawil clarified: “It is important to distinguish that the new virtual assets law does not mean that cryptocurrencies per se will become regulated, as many of these remain outside of the scope of regulation by a centralised regulator. “Rather, the legislation will provide a structure for businesses in the crypto industry to operate in and out of Dubai while holding the appropriate license.”

Commenting on the impact that this is likely to have on the real estate sector, he added: “We would be looking for a mainstream acceptance of cryptocurrency as payment for real estate assets in Dubai for this to have a significant impact in the real estate sector.”

Additionally, in terms of forex trading of virtual assets, the regulation is likely to further encourage and spur growth within the industry.
“We can see retail and institutional investors locally becoming more comfortable with trading in virtual assets. The UAE already boasts quite a high rate of investment in cryptocurrencies on a global scale, we can see two main factors for this (1) an encouraging and adaptive regulatory approach and (2) a multinational and aware population.” Bardawil said.

The Dubai virtual assets law was passed on the same day as the new US Executive Order that sets the framework for cryptocurrencies.
Commenting on the timing, Bardawil said: “Dubai and the UAE continue to be on pace with international markets when it comes to regulatory initiatives in this sector.

“Investors should see this as encouraging given the previous reluctance on the part of the US to issue any specific regulation apart from a few state-issued laws and, of course, see Dubai as continually making a concerted effort to stay at the forefront of nascent technology.”

The full article can be read read: Arabian Business.

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