The United Arab Emirates is poised to issue federal licenses for virtual asset service providers by the end of the first quarter to attract some of the world’s biggest crypto companies, according to a government official. The Securities and Commodities Authority is in the final stage of amending legislation to allow VASPs to set up, said the official, who requested anonymity due to government policy. Binance Holdings Ltd., the world’s largest cryptocurrency exchange by trading volume, is among those considering a bigger presence in the country. A nationwide licensing system for virtual-asset firms could help the UAE better compete with rival financial centers like Singapore and Hong Kong, which are also during creating fully regulated environments for crypto trading.
The UAE completed a risk assessment on virtual assets late last year, involving 14 public-sector agencies and 16 private-sector actors. While there’s a “high risk” that VASPs may be used to engage in illicit finance schemes, the government concluded proper regulation, rather than an outright ban. Emirati authorities are trying to strike a delicate balance as they promote the business-friendly environment that’s made Dubai an attractive regional base for many of the world’s biggest financial firms and tech companies — while also seeking to navigate concerns about volatility and financial crime that keep dogging the crypto industry. The UAE is the Middle East’s third-largest crypto market, trailing Turkey and Lebanon, with a transaction volume of about $26 billion.