In 2022, the United Arab Emirates began the process of legalizing the crypto industry. At present, cryptocurrencies are not yet recognized as a means of payment, but a legal framework has emerged for licensing providers offering services related to virtual assets. As a result, both global crypto giants and new companies in this field have gained the opportunity to legally operate within the country.
Currently, there is no unified nationwide regulation of activities related to the provision of digital asset services, so licensing is carried out within the relevant free economic zones (Free Zones). Accordingly, depending on the emirate in which the economic zone is located, different licensing requirements will apply to applicants.
Many types of activities related to digital asset services fall under licensing. In particular, it is now possible to obtain a license for the exchange and custody of digital assets (digital wallets), the issuance and sale of tokens, the issuance of NFT collections, payment and financial services in the field of digital assets (including brokerage activities, lending, and crypto deposit placement), and many other, more narrowly specialized activities. Thus, the UAE jurisdiction can be used to structure a wide range of crypto projects, from traditional ICOs to complex crypto exchanges.
The cost and complexity of obtaining a license depend on the platform's activities and the emirate in which the company plans to register. Below are the most common options for structuring a crypto business in the UAE:
Emirate of Abu Dhabi. In the capital emirate, cryptocurrency regulation is carried out within the Abu Dhabi Global Market (ADGM) free economic zone by its financial regulator. Due to the Abu Dhabi government's conservative approach to many areas of business, regulation of the virtual asset sector is stricter compared to other regions of the country. In particular, this is reflected in requirements for a fully operational local office with qualified staff and stricter licensing requirements.
A license can be obtained for the main types of digital asset-related activities — brokerage, custodial, investment, payment services, as well as token issuance (including NFTs). The state fee for obtaining a license starts from USD 20,000 and increases depending on the applicant's planned activities.
Emirate of Dubai. In Dubai, it is currently possible to obtain a crypto license in three economic zones — Dubai World Trade Centre (DWTC), Dubai Multi Commodity Centre (DMCC), and Dubai Silicon Oasis (IFZA DSO). Licensing is carried out by the regulator VARA (Dubai Virtual Assets Regulatory Authority), which was established in 2022 under the DWTC economic zone. Regulation of the digital asset industry in the emirate is more flexible compared to Abu Dhabi, but Dubai's reputation as one of the world's financial centers implies quite rigorous vetting of applicants seeking a license.
VARA has an extensive list of crypto licenses regulating more than 20 types of activities. This large number of license types allows applicants to choose the option best suited to their business model and avoid the need to obtain a broader license entailing significantly stricter regulation. The state fee ranges from USD 12,000 to USD 55,000 for the issuance of a single license. Accordingly, depending on the complexity of the platform, obtaining several licenses may be required.
Emirate of Ras Al Khaimah. In this emirate, licensing is carried out within the Digital Asset Oasis economic zone. This is a new economic zone established in 2023, narrowly specialized specifically in digital assets and Web3 projects. The distinctive feature of this economic zone is that it is less heavily regulated compared to the other zones discussed in this article.
Following Dubai's model, Ras Al Khaimah has created a regulatory framework for licensing various types of digital asset services, but the licensing process itself is simpler. This is reflected in more straightforward licensing conditions and a smaller scope of requirements for applicants. The state fee starts from USD 10,000 for a single license and increases depending on the license type.
The main challenge in the context of operating a crypto business in the UAE is banks, which are not yet fully ready to work with virtual assets. However, there is a large number of payment systems, both foreign and local, that process payments related to crypto activities. And given the dynamic nature of the United Arab Emirates, banks' adaptation to the new reality is only a matter of time.
The UAE is not without reason considered one of the most attractive jurisdictions for doing business. This is supported by a flexible tax system, developed legal and economic systems, protection of investors' rights, and a high standard of living. Now the Emirates are open to crypto business as well. However, the existence of regulatory conditions does not mean that licensing is quick or trouble-free. Therefore, before entering the UAE market, it is important to prepare properly, especially from a legal standpoint. To learn more about doing business and obtaining crypto licenses in the UAE, please contact the specialists at Solex Group.
Keywords: cryptocurrencies, digital currencies, virtual assets, crypto license, Dubai, UAE, United Arab Emirates, payment services
Currently, there is no unified nationwide regulation of activities related to the provision of digital asset services, so licensing is carried out within the relevant free economic zones (Free Zones). Accordingly, depending on the emirate in which the economic zone is located, different licensing requirements will apply to applicants.
Many types of activities related to digital asset services fall under licensing. In particular, it is now possible to obtain a license for the exchange and custody of digital assets (digital wallets), the issuance and sale of tokens, the issuance of NFT collections, payment and financial services in the field of digital assets (including brokerage activities, lending, and crypto deposit placement), and many other, more narrowly specialized activities. Thus, the UAE jurisdiction can be used to structure a wide range of crypto projects, from traditional ICOs to complex crypto exchanges.
The cost and complexity of obtaining a license depend on the platform's activities and the emirate in which the company plans to register. Below are the most common options for structuring a crypto business in the UAE:
Emirate of Abu Dhabi. In the capital emirate, cryptocurrency regulation is carried out within the Abu Dhabi Global Market (ADGM) free economic zone by its financial regulator. Due to the Abu Dhabi government's conservative approach to many areas of business, regulation of the virtual asset sector is stricter compared to other regions of the country. In particular, this is reflected in requirements for a fully operational local office with qualified staff and stricter licensing requirements.
A license can be obtained for the main types of digital asset-related activities — brokerage, custodial, investment, payment services, as well as token issuance (including NFTs). The state fee for obtaining a license starts from USD 20,000 and increases depending on the applicant's planned activities.
Emirate of Dubai. In Dubai, it is currently possible to obtain a crypto license in three economic zones — Dubai World Trade Centre (DWTC), Dubai Multi Commodity Centre (DMCC), and Dubai Silicon Oasis (IFZA DSO). Licensing is carried out by the regulator VARA (Dubai Virtual Assets Regulatory Authority), which was established in 2022 under the DWTC economic zone. Regulation of the digital asset industry in the emirate is more flexible compared to Abu Dhabi, but Dubai's reputation as one of the world's financial centers implies quite rigorous vetting of applicants seeking a license.
VARA has an extensive list of crypto licenses regulating more than 20 types of activities. This large number of license types allows applicants to choose the option best suited to their business model and avoid the need to obtain a broader license entailing significantly stricter regulation. The state fee ranges from USD 12,000 to USD 55,000 for the issuance of a single license. Accordingly, depending on the complexity of the platform, obtaining several licenses may be required.
Emirate of Ras Al Khaimah. In this emirate, licensing is carried out within the Digital Asset Oasis economic zone. This is a new economic zone established in 2023, narrowly specialized specifically in digital assets and Web3 projects. The distinctive feature of this economic zone is that it is less heavily regulated compared to the other zones discussed in this article.
Following Dubai's model, Ras Al Khaimah has created a regulatory framework for licensing various types of digital asset services, but the licensing process itself is simpler. This is reflected in more straightforward licensing conditions and a smaller scope of requirements for applicants. The state fee starts from USD 10,000 for a single license and increases depending on the license type.
The main challenge in the context of operating a crypto business in the UAE is banks, which are not yet fully ready to work with virtual assets. However, there is a large number of payment systems, both foreign and local, that process payments related to crypto activities. And given the dynamic nature of the United Arab Emirates, banks' adaptation to the new reality is only a matter of time.
The UAE is not without reason considered one of the most attractive jurisdictions for doing business. This is supported by a flexible tax system, developed legal and economic systems, protection of investors' rights, and a high standard of living. Now the Emirates are open to crypto business as well. However, the existence of regulatory conditions does not mean that licensing is quick or trouble-free. Therefore, before entering the UAE market, it is important to prepare properly, especially from a legal standpoint. To learn more about doing business and obtaining crypto licenses in the UAE, please contact the specialists at Solex Group.
Keywords: cryptocurrencies, digital currencies, virtual assets, crypto license, Dubai, UAE, United Arab Emirates, payment services