Cryptocurrency exchange license in the UAE

Cryptocurrency exchange registration in the UAE is becoming an affordable and popular option due to the large number of free zones that allow businesses to trade and store cryptocurrency, process crypto assets, and engage in related activities. Any type of cryptocurrency is available for trading on crypto exchanges in Dubai.

The UAE's 2021 blockchain strategy calls for 50 percent of all government transactions to be hosted on blockchain platforms. This confirms the government's intention to emphasize adaptation to future technologies and cement the UAE's status as the most advanced economy among the world's developed nations

The world's largest exchanges like Binance will soon establish a presence in Dubai. Eventually, it will be the first global cryptocurrency exchange in the UAE. It is becoming clear that the Emirates will become one of the largest cryptocurrency exchanges serving the entire region

Types of crypto licenses in the UAE

The current government provides for regulated and unregulated activities of crypto companies

The license requirements, conditions, and possibilities depend on the chosen economic zone. After registering a license, you will be able to issue digital currencies, make exchanges, manage your assets, register a cryptocurrency exchange, and conduct brokerage activities

You can get a crypto license in UAE in the following zones: DMCC, DAFZA, ADGM, DWTC

Let's take a closer look at opening each type of crypto company in the UAE

Crypto license at DMCC

DMCC (Dubai Multi Commodities Center) is a free economic zone and one of the most popular cryptocurrency businesses in the UAE. Getting a cryptocurrency license in Dubai is available at DMCC and guarantees the legality of your business. The first company to open this license and provide cold storage services for cryptocurrencies is Regal Assets

To register a crypto-exchange, it is necessary to register a company with the Dubai Multi Commodities Center. With this license, it is possible to carry out various cryptocurrency services for customers: management, storage, trading, software applications, crypto exchange, and other services. In the long run, this license will become the main category for businesses

Two types of licenses are available to entrepreneurs at DMCC:

• Cryptocurrency trading. You will be able to trade (buy and sell) digital assets that were created based on distributed registry technology. Note that this license does not include providing services as a cryptocurrency exchange, brokerage, financial and banking operations, payment processing, or holding currencies from third parties
• Distributed registry license. You will have access to database management, and additional services based on distributed registry technologies, such as a meta-universe service provider or e-commerce provider

Cryptocurrency license at DAFZA

DAFZA is the Dubai Airport Free Zone Authority. To support trading related to the commercial activities of cryptocurrency assets, DAFZA and SCA (Dubai Securities Authority) have signed an agreement. According to this, businesses are allowed to trade cryptocurrencies and provide services to customers

DAFZA intends to integrate the issuance of cryptocurrency licenses with the rest of the global services for investors. Flexible legislative support and regulatory framework from DAFZA are provided for the smooth functioning of business operations. The development of cryptocurrency companies in the UAE is aimed at stimulating the growth of trade and the entire sector in the region

There is currently 1 type of cryptologic license available for own cryptocurrency trading. This license is regulated by the SCA, and under its control are offerings, issuance, asset trading, and related financial activities

Crypto license in ADGM

ADGM (Abu Dhabi Global Markets) is an Abu Dhabi financial-free zone that is supervised by regulators. They established rules for cryptocurrency activities back in 2018. ADGM aims to connect the Emirates to the cross-national markets of the Middle East, South and East Asia, and Africa to diversify the UAE economy

It is the first jurisdiction in the world that has created a comprehensive regulatory framework for cryptocurrency transactions. The comprehensive framework makes it easier for the leading players in this industry to operate in a business-friendly environment. It covers the full range of different risks associated with financial crime, financial laundering, customer protection, cryptocurrency exchange, and storage operations, and technology management

Obtaining a license in the ADGM zone allows you to cover the full range of activities that are associated with crypto assets: a license for a cryptocurrency exchange in the UAE; storage of cryptocurrency; buying and selling; management of crypto assets of third parties; marketing of cryptocurrency

Cryptologic license at DWTC

DWTC (Dubai World Trade Center) is a free zone established in 2015, which is designed to operate and serve innovative industries in the field of virtual assets, cryptocurrency, blockchain, etc

This zone is closely cooperating and also coordinating with VARA (Virtual Asset Regulatory Authority) to approve the status of the newly designated zone for regulated crypto companies. All actions and approval processes for cryptocurrencies are coordinated with VARA

In addition, one of the largest cryptocurrency exchanges, Binance signed an exclusive memorandum of cooperation with DWTC, which will help make the zone a cryptocurrency hub for the region

DWTC reports that it will be one of the first zones to allow crypto licensing in the UAE under the supervision of the Securities and Commodities Authority

In addition:

• the ability to provide financial advice
• manage crypto assets
• brokerage activities

Informational services on the balance

VASP has the authority to manage and safeguard cryptocurrency depository wallets belonging to clients, and store and provide clients with information services on balances, and incoming and outgoing transactions. Clients may request up-to-date information regarding their accounts.

Please note that this information may be requested by regulators under KYC guidelines. Therefore, it is important to maintain ongoing analysis and reporting.

Advantages of crypto business in UAE

Get significant advantages when registering a crypto-business in UAE compared to crypto licenses in other jurisdictions, thanks to the loyalty of the Emirati government, investor support, and the rapid development of UAE cryptocurrency. You can protect your privacy and get enhanced security from blockchain technology in Dubai

Key Benefits:

• The Fintech field is supported at the state level
• Absolute foreign ownership of a local enterprise without involving resident partners is allowed
• All individual income from international activities is tax-free
• The most loyal taxation is 0% on income up to 50 years of business activity
• There are no currency restrictions and no import and export tax rates
• No restrictions on the employment of foreign employees in the company
• Profit can be withdrawn to foreign accounts
• Increased confidentiality of personal data and transactions
• Agreements are available for the avoidance of double taxation
• The stable banking system and economy
• Full legalization of cryptocurrency

Regulations

The main regulatory body that implements all the regulations and rules for cryptocurrency business in the UAE is the SCA (Securities and Commodities Authority). Their regulations apply to many forms of cryptocurrency-related activities

Payment tokens (stable coins) and stored value funds are regulated by the UAE Central Bank

Crypto Licenses from DAFZA are also regulated by the SCA. It oversees the offerings, issuance, and trading of crypto-assets

The ADGM Free Zone has its own Cryptocurrency Operations Manual, but it was drafted according to SCA regulations. In addition, the FSRA (Financial Services Regulatory Authority) directly regulates ADGM and requires them to follow their own set of rules and guidelines

In addition, the Authority monitors businesses that provide services related to cryptocurrency and blockchain to ensure the prevention of money laundering and other illegal activities. This is currently the only guidance for cryptocurrency operations in the UAE at ADGM

Risks of crypto-assets

The UAE government recognizes all the risks that are associated with crypto-assets:

• financial laundering
• sponsorship of terrorism

Every crypto business is required to develop corporate and customer-oriented rules based on:

• UAE anti-financial laundering and sponsorship of terrorism laws
• Rules and guidelines from the ADGM on anti-financial laundering and countering the sponsorship of terrorism
• FATF international best practices
• Сompliance with global risk mitigation and transparency standards

Principles that should be framed in the management of every enterprise:

• Business risk analysis
• Implementation of QAS, AML, and system controls
• Control of management and enterprise systems
• Mandatory reporting
• Record keeping

If you want to stay within the right field, you have to follow these standards.

Taxation

The UAE is a very attractive country for cryptocurrency businesses on the tax side: the federal income and corporate tax rates are 0%. This applies to companies that use cryptocurrency solely for trading or receive it as a salary.

But we should pay attention to the value-added tax. Since the beginning of 2018, the government introduced new rules but put a low tax rate of 5%. Your company can be set up on a zero-tax basis, but ordinary transactions will be subject to VAT at 5%

If you want to find out if your activity is tax-exempt, Gofaizen-Sherle can consult you on this issue