The UAE’s Capital Market Authority has introduced a comprehensive framework to regulate virtual assets amid rapid sector growth.
Five core modules cover general requirements, conduct of business, alternative trading systems, AML/CFT, and prudential obligations for regulated entities.
The scope of regulated activities expands from three to eight, including dealing as principal or agent, custody, arranging custody, arranging investment deals and providing investment advice.
Regulatory moves build on Dubai’s 2022 virtual assets law and Abu Dhabi’s 2022 guiding principles, reinforcing a nationwide supervisory approach.
“Virtual assets are reshaping how financial markets operate, and regulation must evolve at the same pace,” Waleed Al Awadhi, chief executive of the CMA, said.
The UAE’s Capital Market Authority (CMA) has rolled out a new framework to regulate virtual assets activities, in a move to keep pace with rapid market growth.
The new framework specifies “five core modules” to govern virtual assets activities in the Emirates.
With a focus on general requirements, conduct of business, alternative trading system, anti-money laundering and counter-terrorist financing and prudential requirements, these modules provide a comprehensive and transparent legislative and supervisory structure for entities operating in virtual assets sector, the CMA said on Monday.
The framework also expands the scope of regulated activities from three to eight, including dealing in virtual assets as principal, as an agent as well as providing custody, arranging custody, arranging investment deals and providing investment advice.
“Virtual assets are reshaping how financial markets operate, and regulation must evolve at the same pace,” CMA chief executive Waleed Al Awadhi said.
“This framework establishes clear and comprehensive foundations for virtual asset activities in the UAE, enabling innovation to develop within a trusted environment that safeguards investors and upholds market integrity.”
Virtual assets such as cryptocurrencies are gaining popularity, with Bitcoin hitting a peak of more than $126,000 in October last year on the approval of spot exchange traded funds and wider institutional adoption. However, it lost its momentum recently, with Bitcoin trading at slightly above $70,750 at about 2.28pm UAE time on Monday.
A number of companies specialised in digital assets opened their offices in the UAE in recent times including Binance, the world’s largest cryptocurrency exchange and Kraken, among others.
“The issuance of this framework represents a significant step in the development of the legislative and regulatory environment for the financial sector, underscoring the authority’s commitment to keeping pace with global technological and financial developments,” the CMA said.
In 2022, Dubai adopted the first law of its kind in the emirate to regulate virtual assets and provide international standards for virtual asset industry governance.
In the same year, the Financial Services Regulatory Authority (FSRA), the regulator of Abu Dhabi’s financial hub, ADGM, also published guiding principles on its approach to virtual asset regulation and supervision to outline its expectations for the asset class and service providers in the sector.