Dubai: Anyone using Bitcoins or cryptocurrencies to pay for a property purchase - or any other retail transaction, for that matter – need to be extra careful about being in compliance with tightened up rules on virtual assets.
As Dubai ramps up guidelines on virtual asset usage, consumers get to have greater protection in all such dealings where virtual assets are used.
“To ensure compliance, businesses and individuals should understand the new guideline specifics for crypto usage in these contexts (in B2C transactions),” said Niraj Jain, UAE Practice Lead at Indigenesis Consulting.
It's crucial to align with the FATF (Financial Action Task Force) standards on anti-money laundering and combatting financing of terrorism (AML/CFT).
“It's crucial to align with the FATF (Financial Action Task Force) standards on anti-money laundering and combatting financing of terrorism (AML/CFT).”
In other words, there will be the same onerous requirements that would typically happen in dealings through a banking sector. When Bitcoins and other cryptocurrencies are transacted – whether it’s paying for a hotel stay or buying a latte – the onus is on the business and individual involved that all boxes are ticked.
Dubai’s VARA (Virtual Asset Regulatory Authority) is upping the compliance processes and widening the coverage for its rules. Last week, in alliance with Dubai Department of Economy & Tourism, it will ‘deploy end-to-end processes to ensure market-leading consumer protection and security standards’.
This would apply to virtual asset transactions on the mainland and at free zones. All this even as Dubai’s virtual asset ‘ecosystem commences its transition to full regulatory purview of VARA’.
Full transparency – that’s the end goal for all businesses handling virtual assets. And as far as the regulator is concerned, it’s about further tightening of the rules where needed. “The DET and VARA guidelines aim to regulate and provide an overall framework for Virtual Asset Service Providers,” said Bal Krishen, Chairman and CEO of Century Financial.
The latest guidelines extend far beyond investors trading in these assets through a licensed platform.
August 31 deadline
Entities qualifying for a regulated Full Market Product (FMP) License are expected to transition to a VARA-regulated regime by August 31.
“While trading is indeed a component, the guidelines encompass a holistic approach,” said Jain. “They also address how both individuals and businesses can engage in transactions involving crypto-based assets.
Complying with VARA deadline
“While the earlier regulations established the foundational structure for the VA sector, the new ones offer more specific - and practical - directives on utilizing these across various categories of transactions,” said Jain.
Widened scope for DET
- Under the terms with VARA, Dubai Department of Economy & Tourism will add the latter’s activities to its system for all virtual asset licence issue.
- DET will take on inspections and support VARA with ‘in-situ enforcements’, including imposing penalties such as suspensions or revocations in cases of proven negligence or non-compliance with VARA rules.
- It can also handle ‘Business as Usual’ application renewals for VASPs (virtual asset service providers) that meet VARA requirements in full.
VARA will be included on DET’s E-Permit system, which will enable one-touch point approvals on VA events. “Both parties will actively collaborate on awareness campaigns for VARA product and licensing updates, as well as data sharing protocols and legacy on-boarding,” said a statement issued by VARA.
Full protection for consumers
At the heart of all this is greater protection – or ‘safety net’ – for consumers.
In this regard, the Dubai Corporation for Consumers Protections & Fair Trade department within DET will be upgraded with ‘specialist VA knowhow’, thus helping to provide a ‘transparent, seamless customer experience’.
VARA and DETA will also collaborate on campaigns designed to raise awareness towards consumer protection in the virtual asset space, including ‘communicating consumer protection information and advice’.
DET will also publish relevant notices and warnings, including penalty notices and consumer protection advisories, on its websites.
“DET will now add VARA activities to its system to issue new licenses," said Krishen. With the new MoU, VARA can now work seamlessly with global regulators in matters of digital and virtual assets.
"The approach also highlights Dubai’s stance on providing a pro-business and pro-growth environment to all the stakeholders involved.”