The Dubai Virtual Asset Authority (DVAA) has enacted a ban on the usage of privacy-focused cryptocurrencies such as Monero (XMR) and ZCash (ZEC), as well as all related activities. This includes buying, selling, trading, and facilitating transactions with these types of digital assets. The DVAA stated that the ban was put in place to protect consumers and ensure compliance with anti-money laundering regulations.
This move by the VARA is in line with the regulator’s stringent measures to ensure that crypto firms in Dubai abide by the laws and regulations of the country.
The implementation of this ban was released as a result of the growing popularity of privacy-focused cryptocurrencies in the crypto industry. Many crypto investors have been turning to these digital assets as a way to protect their funds from government regulations. However, the VARA believes that the anonymity-enhanced nature of these cryptocurrencies poses a threat to the country’s financial stability, which is why they have decided to implement a total ban.
Under the new regulations, crypto firms must be able to demonstrate the origin of their crypto funds and assets present in their systems. They must also obtain a license from the VARA and comply with the regulator’s framework to operate in Dubai. The VARA has stated that the ban is necessary to prevent miscalculations and to ensure that Dubai’s financial system remains secure and transparent.
The VARA Issues Its Regulatory Guidelines
On Tuesday, February 7th, 2023, the Virtual Assets Regulatory Authority (VARA) of Dubai unveiled its highly anticipated regulation guidelines for the local cryptocurrency industry. The guidelines set forth ten essential principles for the industry to follow, covering key areas such as licensing requirements, anti-money laundering obligations, marketing protocols, and more. One of the most notable provisions in the guidelines is the ban on the use of anonymity-enhanced cryptocurrencies, such as Zcash and Monero.
The new regulations aim to promote transparency and accountability in the local cryptocurrency industry, while also ensuring the safety and security of consumers. The licensing requirements established by the VARA will ensure that all crypto firms operating in Dubai have met the necessary standards and have been granted the appropriate regulatory approvals. The anti-money laundering obligations outlined in the guidelines will help prevent illicit activities, such as fraud and money laundering, from taking place in the crypto industry.
Punishment for Violators
Breaking the rules can lead to hefty fines, with individuals facing penalties of up to $5.4 million and businesses potentially being charged $13.6 million for virtual asset violations. The VARA’s jurisdiction extends beyond Dubai’s boundaries to encompass its special development areas and free zones, except for the Dubai International Financial Centre, which falls under a separate regulation.
Dubai aims to solidify its position as a premier hub for virtual assets by providing a favorable regulatory environment that entices businesses to the city. Despite the rigorous due diligence requirements, the city is steadfast in its commitment to creating a transparent and secure ecosystem for virtual asset dealings, making it a highly desirable location for companies seeking to participate in the industry.
Final Thoughts
The authority has warned that any individuals or businesses found to violate the ban may face severe consequences, including fines and legal action. This move is part of Dubai’s ongoing efforts to maintain its position as a leader in the global fintech sector while ensuring that its financial system remains secure and transparent.
Ken Emmanuel is a Blockchain Content writer, a Web3 Enthusiast and a Social Media Management Strategist, he likes writing educative contents to help people gain more knowledge and get inspired. The growth of any organization he work with is always his priority. He is a Geographer by profession and loves reading.
