In an effort to become an innovator in blockchain technology field, UAE has developed and implemented special Blockchain strategy, according to which, by 2021, 50% of the state transactions must be carried out using Blockchain technology, including cryptocurrencies. Abu Dhabi Global Market (ADGM) authorities introduced cryptoactives regulation that extended to “proprietary trading in crypto-currency goods”, indicating that ADGM treats virtual currency as a commodity. However, businesses in ADGM holding this license are only allowed to trade on their own behalf. If you want to know more about crypto operations licensing in Abu Dhabi, this article will be useful for you.
The monarchy’s federal securities regulator, Securities and Commodities Administration, is in the final stages of developing a licensing system that will allow virtual asset service providers such as cryptocurrency exchanges opening stores in the country, according to a government official.
Abu Dhabi reportedly took into account the latest recommendations from Cryptocurrency Financial Action Task Force and the strategies used by the UK, US and Singapore in developing the new rules. He ultimately settled on a hybrid approach whereby the SSC and the central bank would be responsible for regulation and the regional financial centers would have autonomy over day-to-day licensing procedures.
The proposed federal licensing regime for crypto firms will help the UAE compete with rival financial centers such as Hong Kong and Singapore, which are also gearing up for a fully regulated cryptofriendly environment. In addition to licensing, the country also wants to create a business-friendly climate for cryptocurrency miners, while also considering the potential environmental impact of the industry.
Cryptofirm Licensing Process
Crypto and tokens regulation is changing quite quickly. While in some jurisdictions the financial regulator is only forming its attitude towards digital currencies, there are territories where the position of the regulator is clearly formed. In a number of jurisdictions, jurisprudence already exists.
To obtain a license for cryptocurrency, you should follow following steps:
- Register organization in UAE.
- Confirm availability of sufficient capital to successfully run structure for a period of at least 6 months.
- Collect and send to the relevant regulator license documents indicating the name of the company and the personal details of the directors/shareholders.
- Comply with strict KYC and AML/CTF laws.
- Develop a cybersecurity protection policy.
- Pay the registration fee.
Cryptocurrency market has now actually shown its resilience, as well as the main intentions to dominate the entire globe and also make it much better. Capitalization of cryptoactives is increasing every year, and it is also necessary to quickly establish market development. Previously, accredited cryptocurrency trading opened up opportunities for large institutional capitalists, as well as for financial structures in the cryptocurrency market, that were previously inaccessible to them.
Recently, the mining industry has increasingly attracted the attention of environmentalists and legislators around the world due to high electricity consumption and possible negative impact on the environment.
Abu Dhabi authorities are looking into crypto regulatory strategies used in the US, UK and Singapore. UAE has adopted a “hybrid” approach to industry oversight. According to the official, cryptocoins market regulation will be handled by the SCA and the central bank, while local financial centers will be able to establish their own procedures regarding licensing. This includes the application process and due diligence by government authorities. Although a lot will depend on whether the organization intends to register on the mainland or in a free commercial zone.
Taxation of Crypto Structures
UAE does not apply income and corporate taxes; hence, there is no tax for companies trading in cryptocoins. VAT rate is quite low (only 5%). Investors can register a cryptocurrency company in the UAE, which can receive tax exemption. However, regular transactions using virtual currencies are subject to 5% VAT.