UAE tightens control over cryptocurrency dealers

The Public Prosecutor’s Office of the UAE has warned the public against unlicensed fundraising – fines for such violations are as high as AED 1 million.

In addition, offenders could face up to five years in prison. Thus, the prosecutor’s office is stepping up the fight against financial and digital currency-related crimes.

Pursuant to Article 41 of Federal Decree No. 34 of 2021 on Combating Rumours and Cybercrimes, anyone who promotes cryptocurrency, collects funds from the public for the purpose of investing them, managing them, using them, without having a licence will be prosecuted by law.

Fines will range from AED 250,000 to AED 1 million. In addition, the perpetrators will have to return all the funds collected. The reminder was part of an information campaign to raise legal awareness among the public.

The prosecutor’s office of the UAE had earlier reminded the public of heavy fines – up to AED 500,000 – for misleading people through advertisements or promotions. According to Article 48 of Federal Decree-Law No. 34 of 2021 on combating rumours and cybercrime, offenders face a fine of between AED 20,000 and 50,000 and/or imprisonment.

Offences include the promotion of digital or virtual currencies that are not registered in the UAE, including by an unlicensed company. The prosecutor’s office has issued a reminder as part of an ongoing campaign to promote legal literacy among the public.

The Dubai Virtual Assets Regulatory Authority (VARA) had earlier issued new regulations on cryptocurrency and NFT trading based on the principles of economic sustainability and cross-border financial security.

The rules will discourage money laundering and terrorist financing, as well as guarantee additional protection for investors. The category of virtual assets includes digital currencies and tokens (NFTs).

Licensed entities will be required to apply the gold standard in terms of risk protection and anti-money laundering. VARA has also unveiled a new digital asset framework that will facilitate next-generation innovation.

The new rules apply to all seven cryptocurrency-related activities, including exchange, storage, transfer and payment services, investment, brokerage and advisory services.

Cryptocurrency issuance will become a regulated activity, so consumers will be able to make more informed decisions when launching new tokens. MVP operating licence applicants [and temporary or provisional MVP licence holders], UAE-based virtual asset service providers (VASPs) and new market entrants will be able to obtain full FMP licensing.

All service providers operating in the Dubai market prior to the publication of the FMP rules will be required to register with VARA and comply with the new rules, as well as be held liable for breach of them.

Source: Arabian Business

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