The government of the United Arab Emirates has implemented a new law regulating virtual assets in the country, establishing its initial regulation of the cryptocurrency sector on a federal level.

Prior to the imposing of federal-level regulations, the UAE had already laid the groundwork for addressing digital assets in free economic zones like the Abu Dhabi Global Market and Dubai's Virtual Asset Regulatory Agency. In the event that actors engaging in cryptocurrency activities do not follow the laid-out regulations, they will be subject to substantial fines up to the amount of 10 million AED ($2.7 million), surrender any profits made, or potentially even face criminal investigation by the public prosecutor, according to Irina Heaver, a UAE-based lawyer specializing in crypto and blockchain.

Heaver pointed out that the new federal law will officially be implemented on Jan. 14, mandating that crypto entrepreneurs in the UAE must adhere to it. She went on to explain that any crypto and Web3 projects functioning in the UAE must take steps to ensure that they meet the requirements of the law, as well as any current regulations.

Despite the attainability of the necessary requirements for Virtual Asset Service Providers (VASPs), the lawyer stated that numerous firms may have trouble meeting them. The requirements are reasonable, but the reality is that most crypto companies miss key fundamental needs, remarked Heaver.

Heaver highlighted that VASPs must comply with all laws related to fighting money laundering, terrorism financing and financing illegal activities. Additionally, VASPs have a three-month period to adapt to the new law. Despite the effort to protect the consumer by creating a new law, Heaver admitted that it may be challenging to prevent organizations like FTX from fraud. Heaver shed light on the case of FTX stating that it was a serious case of fraud that could even make Bernie Madoff appear like an angel by comparison. Unfortunately, Heaver noted that no levels of laws can protect against people who are intent on committing crimes. The lawyer overall views the recent development as favorable to founders, investors and consumers residing in the UAE and states that regulatory clarity is exactly what the country needs in order to become the “Web3 capital of the world.”



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