United Arab Emirates (UAE) regulators, SCA and VARA, have signed a cooperation agreement to strengthen the country’s position as a virtual assets hub. The agreement outlines licensing requirements for VASPs, establishes mutual supervision mechanisms, and aims to foster a stable and regulated virtual assets sector in the UAE. Both regulators will work together to ensure compliance with anti-money laundering laws and maintain market confidence.

Joint Oversight of VASPs

UAE regulators, the Securities and Commodities Authority (SCA) and the Virtual Assets Regulatory Authority (VARA), recently signed a cooperation agreement aiming to cement the country’s status as a virtual assets hub. The agreement was signed by Maryam Buti Al Suwaidi, the SCA’s chief executive, and her counterpart at VARA, Matthew White.

According to a statement, the cooperation agreement obliges virtual asset service providers (VASPs) operating in or from Dubai or those seeking to target the Dubai market to obtain a license from VARA. Once the license has been granted, the VASP is approved to operate in the wider UAE by the SCA. However, VASPs seeking to operate out of any other emirate will need to be licensed by the SCA.

The agreement also covers the mechanism for mutual supervision of VASPs, penalty and fine imposition, the exchange of information and statistics, and cooperation in employee training and qualification.

Speaking at the signing ceremony, the SCA chairman, Mohamed Ali Al Shorafa, said:

We strive to establish effective frameworks in cooperation with our partners to foster the growth and stability of the virtual assets sector in the UAE, thus ensuring the enforcement of anti-money laundering legislation and bolstering confidence in the UAE’s investment ecosystem.

VARA chairman Helal Al Marri characterized the collaboration as a milestone demonstrating regulatory cohesion across the UAE. Marri said the strength of the collaboration between federal partners like the SCA “allows for seamless and efficient portability of regulated services while ensuring uncompromised market risk assurance across the UAE.”

As per the agreement, both the SCA and VARA will set forth rules and procedures for the licensing and supervision of VASPs or any related activities, services, or associated transactions. This will be done per the provisions of Cabinet Decision No. 111 of 2022 and No. 112 of 2022 (Regulating Virtual Assets and Their Service Providers) and within the respective jurisdiction of both parties, the statement added.

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