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RIYADH: The UAE is preparing to issue federal licenses to virtual asset service providers by the end of the first quarter of the year.
The move comes in a bid to lure some of the world’s biggest crypto firms to the country, Bloomberg reported, citing a government official.
Binance, the world’s largest crypto exchange by trading volume, is among those eyeing a bigger presence in the country.
The Securities and Commodities Authority, or SCA, is in the final stages of changing legislation to allow virtual asset service providers, or VASPs, to set up shop, said the official, who spoke on condition of anonymity due of government policy.
A nationwide licensing system for virtual asset businesses could help the UAE better compete with rival financial hubs like Singapore and Hong Kong, which are also creating fully regulated environments for crypto trading.
Some financial free zones in the UAE have also already issued permits for VASPs.
Dubai’s multi-commodity center has licensed 22, while Abu Dhabi’s global market has six and the Dubai Silicon Oasis Authority has at least one, according to a government report seen by Bloomberg.
In an effort to attract more businesses, the UAE completed a risk assessment on virtual assets late last year, with the participation of 14 public sector agencies and 16 private sector players.
Although there is a high risk that VASPs could be used to engage in illicit finance schemes, the government has concluded that appropriate regulation, rather than outright prohibition, can mitigate these threats, according to The report.
The SCA will handle the regulations with input from the central bank, while local financial centers will be able to establish their own day-to-day licensing procedures, the official said.
In terms of cryptocurrency mining, the UAE wants to build a crypto mining ecosystem, the official said.
It also seeks to overcome concerns about volatility and financial crime that continue to plague the crypto industry, according to Bloomberg.
In the coming weeks, the Financial Action Task Force is expected to decide whether or not to include the United Arab Emirates in the gray list of countries subject to additional scrutiny for deficiencies in the fight against money laundering and terrorist financing. terrorism.