In previous two articles highlighting the new law regulating virtual assets in Dubai, I have explained certain terms related to virtual assets language, such as “virtual assets”, “virtual token”, “virtual assets platform”, “distributed ledger technology”, “virtual asset provider”, “virtual asset portfolio”, “authority”, “activity”, “beneficiary” ….., etc. After explaining the language used in this new investment activity, I have explained the provisions in the law governing, regulation of virtual assets transactions and activities.
Moreover, to more understand this new issue, there are other important provisions in the law governing conduct of the activity stating that, any person shall be prohibited from engaging in the activity of virtual assets, unless he is authorized to do so by the competent authority. Such authorization shall be issued in accordance with the legislation in force, all requirements and procedures shall be approved by the relevant body. Any person wishing to conduct the activity of virtual assets and to be eligible for such conduct must be based in Dubai and must have any of the legal forms approved by the competent licensing authority. If a Person wishes to conduct the activity in Dubai or its free zones, he must obtain prior approvals and authorizations by the competent authority before starting their licensing process from the competent licensing authority.
All through, virtual assets activity shall be conducted within the limits of the requirements, rules and controls specified in the authorization mentioned in the license. Certain virtual assets activities are subject to the control of the competent authority according to the provisions the new law which include, among others, operation and management of virtual asset platform operations, exchange between virtual assets and domestic or foreign currencies, exchange between one or more forms of virtual assets, transfer of virtual assets, custody and management of virtual assets or control over them, virtual asset portfolio services, virtual token offering and trading services. The Authority may undertake, classification and identification of all activities and establish the rules and controls for their practice, or add any virtual asset-related activities practices or services to the activities subject to its authorization and control, or the other way, whereas it shall, in coordination with the relevant entities, make a list of Virtual Asset-related activities, business, practices, services and products that are not to be traded or conducted.
Apart from above, it would be important to mention that, the relevant authorization may be waived only with the prior consent of the competent authority. However, the consent to such waiver shall be taken by the Director General, and any assignment in contravention shall be null and void. Moreover, the competent authority may, for any reasons related to public interest or the regulation of dealing and trading in virtual assets, take some actions and measures including, suspend authorization, restrict, re-operate the execution of any controls or internal policies issued by the virtual asset service providers, or suspend the activity of any of the virtual asset service providers, in exceptional circumstances or in case a threat to the proper and regular functioning occurs, or suspend or cease dealing with any virtual assets, whether traded in the virtual asset platform or any operation related to their offering and issue, in exceptional circumstances or in case a threat to the proper and regular functioning occurs, in accordance with the laws and decisions of the Board.
By this summary, hopefully, all important issues in the new law promulgating the virtual assets activities are clear. However, potential investors shall be more careful while indulging into this new digital investment opportunity as it is not-risk-free. All the best.
Dr. AbdelGadir Warsama
LEGAL COUNSEL
Email: AWARSAMA@WARSAMALC.COM
