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Regulating Unlicensed Virtual Asset Providers: A Comprehensive Guide
With this rise, however, comes the demanding need for robust regulation to safeguard investors and ensure the integrity of financial markets.
In response to this imperative, the UAE has taken a significant step forward with Cabinet Decision No. 111/2022, aimed at regulating virtual assets and combating the use of unlicensed Virtual Asset Service Providers (VASPs) to safeguard investors' interests.
Understanding the Scope and Definitions:
Cabinet Decision No. 111/2022 provides a comprehensive framework for the oversight and licensing of Virtual Asset Service Providers operating within the UAE. Central to its objectives is the abolition of unlicensed entities offering virtual asset services, thereby mitigating the risks associated with illicit activities such as money laundering, terrorist financing, and other financial crimes.
Defining Key Terms:
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- Virtual Assets: Cabinet Decision No. 111/2022, Article 1, defines virtual assets as digital representations of value that can be traded or transferred digitally, excluding digital representations of fiat currency, securities, or other assets.
- Virtual Asset Activities: These include activities related to the provision of virtual asset services in the UAE, or related transactions subject to licensing following the provisions of the decision.
- Virtual Asset Service Providers: These are entities engaged in activities related to virtual assets, including platform operation, exchange services, brokerage, custody, and financial services relating to virtual asset offerings.
- Virtual Asset Platform: This refers to a digital platform for listing, trading, and transferring ownership of virtual assets, executing related clearing and settlement transactions, and storing and saving information and data through Distributed Ledger Technology or any other similar technology.