• Virtual Asset Regulatory Authority (VARA) amends the fiat currency policy to regulate the crypto exchange. 
  • Dubai International Financial Centre (DIFC) introduced new provisions to ensure legal security in case of digital transactions.

Recently, the UAE launched two new digital asset regulations and legislation. There are two major amendments to the crypto rules and regulations:

  1. Virtual Assets Regulatory Authority (VARA) regulations 
  2. Dubai International Financial Centre (DIFC) new digital assets laws

Virtual Assets Regulatory Authority (VARA)

The Virtual Asset Regulatory Authority (VARA) is Dubai’s crypto regulatory authority and recently added crypto rules. They updated their crypto regulatory rulebook and added new regulations.

According to the VARA, ‘Fiat-Referenced Virtual Assets (FRVAs)’ are defined as types of virtual assets that purport to maintain a stable value about the value of one or more fiat currencies but do not have legal tender status in any jurisdiction, as more fully defined in the FRVA Rules. 

In simple terms, Dubai’s authority redefined the fiat currency and its relation to stablecoins. Amendments mainly focus on issuers and acceptance of the FRVA. They state that FRVA is not issued by any jurisdiction and its acceptance depends on the community of FRVA users. 

In addition, to maintain and regulate the stablecoins Dubai’s authority says “Stablecoins pegged to UAE currency, the AED, will remain under the sole and exclusive regulatory purview of the central bank of UAE.” This simply means that stablecoins are going to be under the control of UAE authorities. 

Moreover, there are several other sets of changes, such as Rule III.B and the specific section dedicated to the reference currency. Similarly, other relative changes are made to efficiently regulate the virtual currency. 

Dubai International Financial Centre (DIFC): New Digital Assets Laws

Another important regulation in Dubai’s rules and regulations is proposed by the Dubai International Financial Centre (DIFC), an autonomously regulated organization. DIFC aimed to ensure legal security for investors/traders in the case of digital assets. 

According to Jacques Visses, Chief Legal Officer at DIFC, “DIFC is excited to announce a proposed new Digital Assets Law and new Law of Security regime. DIFC has been working closely with experts in the field of digital assets and banking and finance to create a groundbreaking Digital Assets Law, and in doing so proposes a significantly enhanced and updated Law of Security regime. The proposed Digital Assets Law sets out the legal characteristics of a digital asset, its proprietary nature, and how it may be controlled, transferred, and dealt with by interested parties. The proposed new Law of Security is modeled on the UNCITRAL Model on Secured Transactions and has been adapted to take account of specific factors relating to DIFC. We believe these proposals will put DIFC’s legal and regulatory framework at the forefront of international best practice.”    

The new securities laws cover all the legal frameworks and regulations on how investors/traders will interact with digital assets. These laws have detailed regulations; one such law is the UNCITRAL Model Law on Secured Transactions (the ‘Model Law’). The law is regarding security interest on goods, receivables, negotiable instruments, documents, and intellectual property. 

Conclusion 

Both the new rules and regulations are introduced to regulate cryptocurrencies more efficiently. Multiple provisions ensure crypto currency’s decentralized nature while keeping it under the control of government authorities. 

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