Regulating Virtual
Assets in the Emirate of Dubai[1]
ـــــــــــــــــــــــــــــــــــــــــــــــــــــــ
We, Mohammed bin
Rashid Al Maktoum, Ruler of Dubai,
After perusal of:
Federal Law No. (4) of 2000 Establishing the Emirates Securities
and Commodities Authority and Market and its amendments;
Federal Law by Decree No. (14) of 2018 Concerning the UAE Central
Bank and Regulating Financial Institutions and Services and its amendments;
Federal Law by Decree No. (20) of 2018 Concerning Countering Money
Laundering Crimes and Combatting Terrorism and Illegal Organisations' Financing, its amendments,
and its Implementing Bylaw;
Federal Law by Decree No. (45) of 2021 Concerning Protection of
Personal Data;
Law No. (13) of 2011 Regulating the Conduct of Economic Activities
in the Emirate of Dubai and its amendments;
Law No. (9) of 2015 Concerning the Dubai World Trade Centre;
Law No. (26) of 2015 Regulating Data Dissemination and Exchange in
the Emirate of Dubai;
Law No. (32) of 2015 Concerning the Official Gazette of the
Government of Dubai;
Law No. (1) of 2016 Concerning the Financial Regulations of the
Government of Dubai;
Law No. (8) of 2016 Regulating the Grant of Law Enforcement
Capacity in the Government of Dubai;
Law No. (1) of 2021 Establishing the Dubai Digital Authority;
Law No. (5) of 2021 Concerning the Dubai International Financial
Centre;
Decree No. (22) of 2009 Concerning Special Development Zones in the
Emirate of Dubai; and
The Legislation establishing and regulating free zones in the
Emirate of Dubai,
Do hereby issue this
Law.
This Law will be cited as “Law No. (4) of
2022 Regulating Virtual Assets in the Emirate of Dubai”.
The following words
and expressions, wherever mentioned in this Law, will have the meaning
indicated opposite each of them unless the context implies otherwise:
|
UAE: |
The United Arab Emirates. |
|
Emirate: |
The Emirate of Dubai. |
|
Government: |
The Government of Dubai. |
|
DWTC: |
The Dubai World Trade Centre. |
|
Board of Directors: |
The Board of Directors of the DWTC Authority. |
|
Director General: |
The director general of the DWTC Authority. |
|
VARA: |
The Dubai Virtual Assets Regulatory Authority. |
|
CEO: |
The chief executive officer of VARA. |
|
Virtual Asset: |
A digital representation of value that may be digitally traded, transferred, or used as an
exchange or payment tool, or for investment purposes. This includes Virtual
Tokens, and any digital representation of any other value as determined by VARA. |
|
Virtual Tokens: |
A digital representation of a set of rights that can be digitally
offered and traded through a Virtual Asset Platform. |
|
Virtual Asset Platform: |
A centralised or decentralised digital |
|
Distributed Ledger
Technology: |
A public or private digital database in which Virtual
Asset dispositions are recorded, created, saved, and shared so that the existence and ownership of
Virtual Assets are validated through a synchronized
network of nodes accessible form different sites and locations. This includes the "blockchain” technology. |
|
Virtual Asset
Service Provider: |
A Person authorised by VARA to conduct the Activity. |
|
Activity: |
Any of the activities that require a Permit from VARA and are subject to its oversight, as stated in Article (16)
of this Law. |
|
Permit: |
A document issued by VARA authorising a Virtual Asset Service Provider to conduct the
Activity, or authorising a Person to conduct any activities,
business, or services
related to Virtual Assets as determined by VARA. |
|
Virtual Asset Wallet: |
A digital application, or any other digital or electronic medium,
through which the Virtual Assets owned by a Beneficiary are managed and
transferred, and through which all the transactions conducted on behalf of
the Beneficiary to transfer Virtual Assets between accounts are made. |
|
Beneficiary: |
A Person who acquires the ownership of a Virtual Asset as it is transferred to his Virtual Asset
Wallet, and is recorded and validated through the Distributed Ledger Technology. |
|
Person: |
A natural or legal person. |
This Law applies to the Virtual Asset services provided in all zones across the Emirate,
including Special Development Zones and free zones but excluding the Dubai International
Financial Centre.
Pursuant to this Law, a public corporation named the “Dubai Virtual
Assets Regulatory
Authority” is established. VARA will have legal
personality, financial and administrative autonomy, and the legal capacity
required to undertake all acts and dispositions that ensure the achievement of
its objectives. VARA will be affiliated
to the DWTC Authority.
VARA will have the following objectives:
1.
to promote
the Emirate as a regional and international hub for Virtual Assets and related
services; to boost the competitive edge of the Emirate at the local and
international levels; and to develop the digital economy in the Emirate;
2.
to increase
awareness on investment in the Virtual Asset services and products sector, and
encourage innovation in this sector;
3.
to
contribute to attracting investments and encourage companies operating in the field
of Virtual Assets to base their
business in the Emirate;
4.
to
develop the
regulations required for the protection
of investors and dealers in Virtual Assets, and to endeavour to curb illegal
practices in coordination with the concerned
entities;
and
5.
to develop the regulations, rules, and standards
required for regulating, supervising, and overseeing Virtual Asset Platforms,
Virtual Asset Service Providers, and all other matters related to Virtual Assets.
VARA is the competent entity in the Emirate in charge of regulating,
supervising, and overseeing Virtual Asset services. For this purpose, VARA will have the
duties and powers to:
1.
develop the
general policy and the strategic plans related to regulating Virtual Asset services
in the Emirate, as well as dealing and trading in Virtual Assets in the Emirate; and
present the same, through the Director General, to the Board of Directors for
approval;
2.
regulate,
supervise, and oversee the issuance, offering, and relevant disclosure processes of Virtual Assets and Virtual Tokens;
3.
regulate, and issue Permits to, Virtual
Asset Service Providers in accordance with the requirements, procedures, and
rules adopted by it; and oversee and
supervise them to ensure
their compliance with the provisions of this Law, the resolutions issued in
pursuance hereof, and other Legislation in force in the Emirate;
4.
regulate, and establish rules and controls to govern, the conduct of the Activity in the Emirate, including the
activities related to Virtual Asset management, clearing, settlement, and safekeeping services;
5.
classify,
and determine the types of, Virtual
Assets and Virtual Tokens; and prescribe the standards and rules for trading in
the same;
6.
prescribe, in coordination with the Dubai
Digital Authority, the procedures for protection of the Personal Data of
Beneficiaries;
7.
regulate
and oversee the
operation and management of Virtual Asset Platforms, Distributed Ledger
Technology, and Virtual
Asset Wallets; monitor trading and other transactions conducted through the same; prevent the manipulation of Virtual Asset trading prices; and develop
the rules required to protect Beneficiaries and curb suspicious practices;
8.
issue, in
coordination with the concerned entities, the
instructions and guidelines required for
developing a process for the assessment
and monitoring of Virtual Asset Service Providers; and the procedures and
measures that must be taken in respect of Suspicious Transactions conducted in
violation of the above-mentioned Federal Law by Decree No. (20) of 2018, the
resolutions issued in pursuance thereof, and other Legislation in force in the
Emirate;
9.
educate
Beneficiaries, and raise their awareness, on dealing and trading in Virtual Assets and the risks arising therefrom;
10.
participate,
in coordination with the concerned entities, in local,
regional, and international economic exhibitions, symposia, and conferences on
Virtual Assets, whether held
within or outside of
the Emirate;
11.
cooperate
and coordinate with local, federal, and international entities, as well as the Private Sector, on all
matters related to regulating Virtual Assets, with a view to ensuring the achievement of VARA objectives;
12.
collect, in
accordance with the Legislation in force in the Emirate, the fees prescribed
for conducting the Activity and the charges and commissions related to dealing
and trading in Virtual
Assets on Virtual Asset Platforms;
13.
coordinate
with the Central Bank of the United Arab Emirates on all matters related to the
protection and stability of the financial system in the UAE;
14.
propose Legislation for regulating
Virtual Asset services, and present the same to the competent entities in the
Emirate to take the necessary action in respect thereof;
15.
establish,
solely or in partnership with others, companies and corporations within or
outside of the DWTC for the purposes of achieving the objectives of VARA and ensuring the performance of its functions under this
Law, in accordance with the Legislation in force in the Emirate and the
relevant regulations and bylaws approved by the Board of Directors;
16.
consider
the reports and complaints relating to Virtual Asset services, and make the
appropriate decisions in respect thereof; and
17.
exercise
any other duties or powers that are related to the
regulation, oversight, and
supervision of Virtual Assets and Virtual Asset Service Providers, or that are
required for the achievement of the objectives of VARA, as assigned to it by the Board of Directors.
VARA may, in accordance with the applicable Legislation, outsource any
of its functions under this Law to any public or private entity pursuant to an
agreement concluded with that entity in this respect. This agreement will state
its term and the rights and obligations of both parties.
The executive body of VARA will be comprised
of the CEO and a number of administrative, finance, and technical employees, to
whom the human resources regulations adopted by the DWTC Authority will apply.
a.
The CEO
will be appointed pursuant to a resolution of the Board of Directors upon the
recommendation of the Director General.
b.
The CEO
will, under the supervision of the Director General, manage VARA and supervise its work and activities, with a view to ensuring the achievement of its objectives. For this purpose, the CEO
will have the duties and powers to:
1.
develop the
general policy and the strategic, development, and operational plans, work programmes,
and projects of VARA; submit
the same to the
Director General for approval, in
preparation for final approval by the Board of Directors; and follow up their
implementation upon approval;
2.
draft the
resolutions, regulations, and bylaws related to regulating Virtual Assets, within the scope of the functions
assigned to VARA under this
Law; and develop the general policy and the strategic plans for regulating
Virtual Assets in the Emirate and the relevant dealings and trading transactions thereof; submit the same to the
Director General for approval, in preparation for final approval by the Board
of Directors; and supervise their implementation upon approval;
3.
draft the
code of professional conduct of Virtual Asset Service Providers, and submit the
same the Director General for approval;
4.
propose the
requirements, procedures, and rules for the issuance of Permits; and submit the
same the Director General for approval;
5.
prepare
annual reports on the work, performance, achievements, and activities of VARA, and on the outcomes of its approved plans, programmes, and
projects; and present the same to the Director General to take the appropriate
action in this regard;
6.
propose
procedures and rules for regulating the conclusion of contracts, agreements, and memoranda of
understanding between VARA and
other
parties; and submit the same to the Director General for approval;
7.
prepare the
organisational structure of VARA; and submit
the same to the Director General for approval, in preparation for its final
approval by the Board of Directors as part of the DWTC Authority organisational
structure;
8.
propose, in
coordination with the competent entities in the Emirate, the fees and charges
for the services provided by VARA; and
submit the same to the Director General for approval, in preparation for final
approval by the Board of Directors;
9.
propose the
draft annual budget and financial statements of VARA; and submit the same to the Director General for review, in
preparation for approval by the Board of Directors and final approval by the
competent entities in the Emirate;
10.
draft
resolutions for regulating
the administrative, financial, and technical work of VARA; and submit the same to the Director General for approval;
11.
supervise
the work of the executive body of VARA and
appoint competent and specialised employees;
12.
represent VARA before third parties, and conclude the contracts and
agreements required for the achievement of the objectives of VARA, within the limits of the powers vested in him pursuant to
this Law and the relevant approval authority
chart
approved by the Director General;
13.
form
permanent or temporary committees and work teams, from amongst the employees of
VARA or other
persons. The resolution forming any of these committees or work teams must determine its functions and terms of reference, and any other relevant matters; and
14.
exercise
any other duties or powers required for the achievement of the objectives of VARA, as assigned or delegated to him by the Board of Directors
or the Director General.
c.
The CEO may
delegate any of the powers vested in him pursuant to paragraph (b) of this
Article to any of VARA employees,
provided that such delegation is specific and in writing.
The CEO and the employees of VARA must:
1.
upon
assuming their job duties, disclose in writing to VARA any Virtual Assets owned by them, their spouses, or
children, and any dealings and transactions
with Virtual Asset Service Providers conducted by them, their spouses, or
children; and comply with the relevant resolution issued by the Director
General;
2.
maintain
the confidentiality of the information and Data to which they have access or of
which they become aware by virtue of their positions in VARA;
3.
not,
without first obtaining the relevant written approval of VARA, disseminate, divulge, disclose, or transfer to any Person
or entity any information or Data, or retain any confidential instrument or
document, which is related to VARA, to
Virtual Asset Service Providers, to Beneficiaries,
or to trading
transactions on Virtual Asset Platforms, or
which
has become accessible or known to them by virtue of their positions. The CEO
and the employees
of VARA will remain bound by the confidentiality obligation even after the end
of their service with VARA.
The financial resources of VARA will consist of:
1.
the
financial appropriations allocated to VARA in the
approved annual budget of the DWTC Authority;
2.
the movable
and immovable property allocated to VARA by the
DWTC Authority;
3.
the fees, commissions, and charges collected by VARA in return for the services it provides;
4.
the fines
imposed by VARA for committed
violations;
5.
the revenues generated from conducting the activities of VARA under this Law; and
6.
any other
resources approved by the Board of Directors.
a.
In managing
its accounts and records, VARA will apply
the rules and principles of commercial accounting in accordance with the
relevant internationally recognised standards.
b.
The
Financial Year of VARA will
commence on 1 January and will end on 31 December of each year, except that the
first Financial Year will commence on the date on which this Law comes into
force and will end on 31 December of the following year.
VARA may not perform any work or activity, or participate in any project, that may
lead to a conflict of interest or compromise the performance of its duties
under this Law; and may not own or issue Virtual Assets.
Any funds owed to VARA by third
parties are deemed Public Funds. These funds will be treated as
debts owed to the Government, and will be
collected in accordance with the procedures prescribed by the Legislation in
force in the Emirate.
a.
No Person
may conduct the Activity in the Emirate without obtaining a Permit from VARA. This Permit will be issued in accordance with the
applicable Legislation and the relevant requirements and procedures approved by
the Director General.
b.
A Person
wishing to conduct the Activity must set
up
his business in the Emirate; and must have one of the legal forms approved by the competent
commercial licensing authority in the Emirate.
c.
Where a Person wishes to conduct the Activity in the Emirate or at
any of the free zones thereof, he must first obtain the required approvals and
Permits from VARA prior to
initiating the procedures for licensing by the
competent commercial licensing authority.
d.
The
Activity will be conducted subject to the requirements, rules, and regulations
stated in the Permit.
a.
The
following Activities require Permits
and are subject to oversight by VARA, in accordance with the provisions of
this Law:
1.
provision
of Virtual Asset Platform operation and management services;
2.
provision of services for the exchange
between Virtual Assets and national or foreign currencies;
3.
provision
of services for the exchange
between one or more forms of Virtual Assets;
4.
provision
of Virtual Asset transfer services;
5.
provision
of Virtual Asset safekeeping, management, or control services;
6.
provision
of services related to Virtual Asset Wallets; and
7.
provision
of services related to offering, and trading in, Virtual Tokens.
b.
VARA may classify and define the Activities set forth in paragraph (a) of this Article, and
establish the regulations and rules required to conduct them.
c.
VARA may, subject to the
approval
of the Board
of Directors, add any activity, business,
practice,
or service related to
Virtual Assets to the list of Activities that require Permits and are subject
to oversight by VARA.
d.
VARA will, in coordination with the Concerned Entities, prepare
a list of the activities, business, practices, services, and products that are related to Virtual Assets and are prohibited in the Emirate.
A Permit may not be assigned without first obtaining the relevant
approval of VARA. This approval will
be issued by VARA in accordance with the rules and conditions determined pursuant to
the relevant resolution of the Director General. Any assignment of a Permit in contravention of this Article
will be deemed null and void.
VARA may, for any reasons related to serving the public interest
or to regulating Virtual
Asset trading and transactions in the Emirate, take any of the following actions and measures:
1.
suspension
of Permit issuance;
2.
restriction,
suspension, reinstatement, or stay of implementation of any
internal rules or
policies issued by a Virtual Asset Service Provider, in accordance with the
relevant regulations, bylaws, and resolutions approved by the Board of
Directors;
3.
suspension of
the Activity of any
Virtual Asset Service Provider, in
exceptional circumstances or upon the occurrence of an event that jeopardises
the proper and uninterrupted flow of work, in accordance with the relevant
regulations, bylaws, and resolutions approved by the Board of Directors;
4.
suspension
or cessation of dealing in any Virtual Assets, whether or not traded on Virtual Asset Platforms; or suspension or cessation of any relevant offering or issuance process, in exceptional circumstances or upon the
occurrence of an event that jeopardises the proper and uninterrupted flow of
work, in accordance with the relevant regulations, bylaws, and resolutions
approved by the Board of Directors; or
5.
any other
action or measure determined pursuant to the relevant resolution of the Board
of Directors.
In return for issuing Permits and approvals, and providing other
services, under this Law and
the resolutions issued in pursuance hereof, VARA will collect the
fees, commissions, and charges
prescribed by the relevant resolution of the of the Board of Directors.
a.
The Board
of Directors will issue a resolution determining the acts that constitute
violation of this Law and the resolutions issued in pursuance hereof; and the
relevant fines to be imposed on violators.
b.
In addition
to the penalty of a fine, VARA may take
any of the following measures against a violator:
1.
suspending the Permit for
a period not exceeding six (6) months; or
2.
revoking
the Permit and coordinating with the competent commercial licensing authority
in the Emirate to cancel the commercial licence.
a.
VARA employees nominated pursuant to a resolution of the
Director General will have law enforcement capacity to record the acts
committed in breach of the provisions of this Law and the resolutions issued in
pursuance hereof. For this purpose, they may inspect the Virtual Asset Service
Providers and Persons authorised by VARA to conduct
the activities or provide the services related to Virtual Assets; access any
records or documents in their possession; issue the necessary violation
reports; and, where necessary, seek the assistance of police personnel.
b.
The law
enforcement capacity referred to in paragraph (a) of this Article will be
granted in accordance with the provisions of the above-mentioned Law No. (8) of
2016 and the resolutions issued in pursuance thereof.
Any affected party may submit a written grievance to the Director
General against any decision, action, or measure taken against him under this
Law or the resolutions
issued in pursuance hereof, within thirty (30) days from the date of being
notified of the contested decision, action, or measure. The grievance will be
determined, within fifteen (15) days from the date of its referral to the committee formed by
the Director General for this purpose. The decision issued by the committee on
the grievance will be final.
a.
All
Persons, including Virtual Asset Service Providers, must fully cooperate with VARA and meet its requirements in
accordance with the provisions of this Law and the resolutions issued in
pursuance hereof; provide it with all the information and documents it requires
to enable it to exercise its functions and powers and to achieve its
objectives; and not obstruct exercising these
functions and powers by VARA.
b.
For the
purposes of exercising the functions assigned to it under this Law and the
resolutions issued in pursuance hereof, VARA may seek
assistance from the concerned Government Entities in the
Emirate and from free zone authorities, including police personnel. Upon
request, these entities must provide support and assistance to VARA.
c.
Where
necessary, VARA may, if any of the Persons to whom this Law applies refuses or fails to allow it to exercise its
functions under the Law, take recourse to the competent court to order the seizure of any
information, documents, or equipment; or preservation of the places where these required items or Data are kept.
a.
The
Government will not be liable to third parties for any debts or obligations
incurred in respect of the work and activities of VARA or any of the entities to which VARA delegates its duties or powers. VARA will be solely liable for such debts or obligations.
b.
Neither VARA nor any of
the entities to which VARA delegates its
duties or powers will be liable
to third parties for any obligations incurred by Virtual Asset Service
Providers or by the Persons
authorised by VARA to provide
any of the services or conduct any of the activities related to Virtual Assets.
Except in cases of fraud and gross fault, neither the Board of
Directors, nor the Director General, nor the CEO, nor the employees of the
executive body of VARA will, in the course
of performing their duties under this Law and the resolutions issued in
pursuance hereof, be liable to any third party for any act or omission committed by them in connection with the performance of these duties.
VARA will be solely liable to third parties
for such an act or omission.
a.
With the
exception of the resolutions which the Board of Directors is authorised to
issue under this Law, the Director General will issue the resolutions required
for implementing the provisions of this Law. These resolutions will be
published on VARA website.
b.
The
resolutions issued by the Board
of Directors and the Director General and published
on VARA website
pursuant to paragraph (a) of this Article will have the binding force of the
Legislation published in the Official Gazette of the Government of Dubai
pursuant to the above-mentioned Law No. (32) of 2015.
Any provision in any other Legislation is hereby repealed to the
extent that it contradicts the provisions of this Law.
This Law will be published in the Official Gazette and will come
into force on the day on which it is published.
Mohammed bin Rashid Al Maktoum
Ruler of Dubai
Issued in Dubai on 28 February 2022
Corresponding to
27 Rajab 1443 A.H.
©2022 The Supreme
Legislation Committee in the Emirate of Dubai
[1]Every effort
has been made to produce an accurate and complete English version of this
legislation. However, for the purpose of its interpretation and application,
reference must be made to the original Arabic text. In case of conflict, the
Arabic text will prevail.