I. Initial Situation & Position of the UAE
In recent years, cryptocurrencies have become a defining element of the global financial landscape. As digital assets, they are based on cryptographic technologies and function both as a means of exchange and as decentralized accounting systems. In particular, Bitcoin and Ethereum have generated significant market resonance and triggered an accelerated need for regulatory action. The United Arab Emirates (UAE) recognized this shift early on and has positioned itself as one of the leading jurisdictions for the regulation and promotion of innovation in the field of virtual assets.
II. Implementation by the UAE
To create a stable and trustworthy environment for investors and service providers, the UAE follows a dual-track approach: on the one hand, regulatory frameworks are being consistently developed; on the other, targeted space is being created for technological innovation. At the federal level, oversight of the crypto sector is primarily the responsibility of the Securities and Commodities Authority (SCA), whose Decision No. 23/2020 contains key regulations for crypto asset activities on the mainland and in selected free zones.
In cooperation with the Central Bank of the UAE, it is ensured that both traditional crypto assets and tokenized securities are managed in compliance with legal requirements. A central instrument for anchoring regulatory standards is Cabinet Decision No. (111) of 2022. This decision defines key terms such as virtual assets, virtual asset service providers (VASPs), and the competent supervisory authorities.
According to Article 4 of this decision, any natural or legal person providing services related to the exchange, transfer, custody, or trading of virtual assets must obtain appropriate licensing from the SCA or the relevant local regulatory authority. Furthermore, under Article 6, the competent authorities are empowered to monitor activities, ensure data protection, and implement anti-money laundering (AML) measures. Compliance with both national and international standards (particularly the FATF guidelines) is mandatory. Violations of these regulations may result in substantial fines of up to AED 10 million, as stipulated in Article 12.
III. Dubai and the Virtual Assets Regulatory Authority
Within the federal structure of the UAE, the Emirate of Dubai plays a special role. With Cabinet Decision No. (112) of 2022, the Virtual Assets Regulatory Authority (VARA) was established, which holds extensive powers for supervising, licensing, and regulating virtual asset activities. VARA is responsible, among other things, for implementing AML requirements, regulating data protection matters, and educating investors about potential risks. It works closely with the SCA to establish a unified and enforceable regulatory system.
This institutional framework is supplemented by Administrative Decision No. (1) of 2023, which established a special complaints committee to resolve disputes related to VARA’s decisions.
1. Regulatory Approach
The UAE’s regulatory approach aims to actively enable innovation while ensuring a high level of legal certainty and transparency. The clear legal framework and consistent licensing practices are designed to effectively combat risks such as money laundering, terrorist financing, and other forms of financial crime. There is an explicit ban on unlicensed companies offering virtual asset services.
At the same time, Dubai in particular has evolved into an international hub for digital financial innovation. The Emirati approach is increasingly being seen as a model for balanced crypto regulation.
2. International Political Approach
In addition to preventing financial risks, broader political goals are also in focus — including consumer protection, the promotion of economic inclusion, and the maintenance of a fair competitive environment. The UAE’s strategic positioning as a hub for regulated crypto activities aims to build trust among international market participants and stimulate long-term, sustainable growth.
Given the increasing complexity of international regulation, coordination with foreign supervisory authorities will play a central role in the future — both to prevent regulatory arbitrage and to promote cross-border compliance.
IV. Conclusion
The virtual assets market in the UAE is currently in a phase of consolidation. It is foreseeable that mergers, acquisitions, and strategic alliances within the sector will become more frequent in the coming years. Numerous licensed companies in Dubai and Abu Dhabi are already preparing for international expansion, using their regulatory base as a springboard to enter other markets.
With more than 30 providers currently licensed by VARA and a growing number of companies regulated within the Abu Dhabi Global Market (ADGM), the UAE underscores its role as a globally competitive hub for crypto regulation.
