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Dubai Introduces Ambitious Crypto Licensing Framework Amid Industry Regulatory Uncertainty

The Middle Eastern giant has introduced another crypto regulatory framework to address various issues and attract overseas firms. As a result, the latest regulatory move will see Dubai have a solid licensing regime for digital asset service providers.

Amid Global Crypto Regulatory Uncertainty

Dubai’s licensing regime comes when the crypto market is recovering from a painful tailspin that has seen the fledgling industry witness tumultuous periods for most of 2022. Due to the broader market bloodbath, regulators are stepping up and doubling down in implementing strict guidelines and enforcing new policies.

Thus, crypto firms and investors were left in the dark due to the uncertainty regarding the future of digital assets. Furthermore, under Dubai’s new crypto regime, all firms seeking to offer one or numerous crypto services within the United Arab Emirates (UAE) must seek approval from the relevant regulators for licensing.

According to reports, the new framework comes with four compulsory instructions for service providers and seven activity-based manuals that spell out the services offered within the UAE. As one of the seven emirates that make up the UAE, Dubai has continued to set the pace in its bid to become a global crypto and blockchain hub.

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It has been steadily courting foreign companies to establish a presence in its jurisdiction even before announcing its planned regulations for the crypto sector. Interestingly, an institutional crypto custody service provider, Hex Trust, is reportedly the first to get an operating license after the Virtual Asset Regulatory Authority (VARA) published the new rules.

According to Mohamed Reda El Shiekh, the head of compliance at Hex Trust, the firm has been anticipating the licensing framework for some time now.

A Work In Progress

However, the new rules are a work in progress because their comprehensive nature leaves them open to further review. The legal framework for Dubai’s aspiration to become a crypto hub also highlights the costs of ensuring the region’s compliance.

This would make it difficult for small firms to establish operations there. Talal Tabbaa, the founder of CoinMENA, commended the move stating that the licensing costs are “peanuts” compared to other expenses like operation and recruitment.

However, industry observers believe that some of the fees charged by VARA are expensive, considering that not all companies can afford to pay. Based on the document of the new law, a firm looking to offer exchange services is expected to pay an application fee of $27,200 or 100,000 UAE Dirham, with an annual supervision fee double the application costs.

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The application fee does not guarantee approval. Should a company seek to offer additional services like custody, it must apply for additional licenses with a 50% discount on costs. Meanwhile, other parts of the emirates, like Abu Dhabi, charge $20,000 as an application fee and $15,000 as an annual supervision fee.


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Bradley Nelson

Bradley Nelson is a US based cryptocurrency news writer for Tokenhell, he helps readers stay up to date with the latest trends and news from the blockchain and crypto world. Bradley has been a crypto enthusiast since 2018.

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