Legislation Overview
- Full Title: Cabinet Resolution Regulating Virtual Assets and the Related Service Providers - Type: Cabinet Resolution - Issued Date: 12 Dec 2022 - Effective Date: 14 Jan 2023 - Sector: Economy and Business - Number of Articles: 37 - Current Status: Active
Summary
This Cabinet Resolution aims to develop the legislative framework for the virtual asset (VA) sector in the UAE, including regulating VA activities and virtual asset service providers (VASPs). It defines the objectives, scope, and key requirements for operating in the VA sector, as well as the functions and powers of the Securities and Commodities Authority (SCA) in overseeing and enforcing compliance. The resolution also outlines penalties for non-compliance. (Cabinet Resolution Regulating Virtual Assets and the Related Service Providers, 2022, Arts. 1-17) The legislation is significant in providing a comprehensive regulatory regime for the growing VA industry in the UAE, with the goal of attracting international companies while also protecting investors and ensuring compliance with anti-money laundering and counter-terrorism financing laws. (Cabinet Resolution Regulating Virtual Assets and the Related Service Providers, 2022, Art. 2)
What is the scope and purpose of this law?
The resolution applies to the VA sector in the UAE, including free zones, as well as VA activities and VASPs operating in the country. It aims to develop the legislative framework for the VA sector, regulate VA activities and VASPs, ensure compliance with anti-money laundering and counter-terrorism financing laws, support the UAE's efforts to attract international VA companies, and protect investors. (Cabinet Resolution Regulating Virtual Assets and the Related Service Providers, 2022, Art. 3)
What are the key definitions?
The resolution provides definitions for key terms, including: - "Virtual Assets (VAs)": The digital representation of the value of a property that can be digitally traded or transferred, and can be used for investment purposes. (Cabinet Resolution Regulating Virtual Assets and the Related Service Providers, 2022, Art. 1) - "Virtual Asset Service Providers (VASPs)": Any legal person who carries on one or more activities or operations related to VA for the interest or on behalf of any person, including VA platform operators, brokers, and custodians. (Cabinet Resolution Regulating Virtual Assets and the Related Service Providers, 2022, Art. 1) - "Distributed Ledger Technology (DLT)": A public or private digital database through which transactions of VAs are recorded, created, stored and shared. (Cabinet Resolution Regulating Virtual Assets and the Related Service Providers, 2022, Art. 1)
What are the main obligations and requirements?
The resolution imposes several key obligations and requirements: - It is prohibited to engage in VA activities in the UAE without obtaining approval and a license from the SCA or local licensing authorities. (Cabinet Resolution Regulating Virtual Assets and the Related Service Providers, 2022, Art. 4) - VASPs must have the UAE as their domicile and operate in an approved legal form. (Cabinet Resolution Regulating Virtual Assets and the Related Service Providers, 2022, Art. 4) - VASPs must obtain necessary approvals and permits before obtaining commercial licenses. (Cabinet Resolution Regulating Virtual Assets and the Related Service Providers, 2022, Art. 4) - It is prohibited to deal with unlicensed persons carrying out VA activities. (Cabinet Resolution Regulating Virtual Assets and the Related Service Providers, 2022, Art. 4)
What are the rights and protections?
The resolution does not explicitly outline any specific rights or protections granted to investors or other parties. The focus is primarily on regulating VA activities and VASPs to ensure compliance and protect the financial system.
What are the penalties for non-compliance?
The SCA, in coordination with local licensing authorities and the Ministry of Finance, can impose the following penalties for violations of the resolution: 1. Warning 2. Suspension of VA listing or trading 3. Suspension of VASP technologies 4. Suspension or prevention of VA platform operation 5. Suspension or revocation of VASP licenses 6. Suspension of any VA-related activities (Cabinet Resolution Regulating Virtual Assets and the Related Service Providers, 2022, Art. 12)
How does this law interact with other UAE legislation?
The resolution references and interacts with several other UAE laws, including: - Federal Law No. (4) of 2000 concerning the UAE Securities and Commodities Authority and Market - Federal Law No. (8) of 2004 concerning the Financial Free Zones - Federal Decree Law No. (14) of 2018 concerning the Central Bank and Regulating the Financial Institutions and Activities - Federal Decree Law No. (20) of 2018 concerning Anti-Money Laundering and Countering the Financing of Terrorism and Non-legitimate Organizations (Cabinet Resolution Regulating Virtual Assets and the Related Service Providers, 2022, Preamble)
When did this law come into effect and what are the transitional provisions?
This Cabinet Resolution came into effect on 14 January 2023. (Cabinet Resolution Regulating Virtual Assets and the Related Service Providers, 2022, Art. 18) The legislation does not include any specific transitional provisions.
Source Documents
This article analyses Cabinet Resolution Regulating Virtual Assets and the Related Service Providers for legal research and educational purposes. For the purpose of interpretation and application, reference must be made to the original Arabic text. In case of conflict, the Arabic text prevails. This does not constitute legal advice.