Cryptocurrency In The UAE - An Overview Of The Legalities And Restrictions

Cryptocurrency projects are on the rise and despite the UAE being initially defiant of tapping into digital assets, the industry now seems to open up. Cryptocurrency projects in the UAE are not yet fully regulated, though, but there are clear guidelines and practices that anyone who wants to get involved in the industry can rely on.

In this post, we will focus on these guidelines and practices and explore any other crucial information about crypto legalities and restrictions in the UAE.


Regulators of cryptocurrencies in the UAE

The Financial Services Regulatory Authority (FSRA) is responsible for regulating crypto and blockchain projects in the UAE. This body is responsible for ensuring transparency in blockchain businesses and preventing fraudulent and laundering activities in crypto transactions. Other bodies such as the Securities and Commodities Authority (SCA) and Dubai Financial Security Authority (DFSA) may find their way into crypto regulations and legislation in the future.

To be legalized to run a cryptocurrency business in the UAE today, you must get a license from the Dubai Multi Commodities Centre (DMCC). However, you register your company under DMCC; you will only be allowed to trade on their behalf.


Crypto Laws in the UAE

As of now, there are no solid crypto laws in the UAE and you can only rely on the Regulations of Crypto Assets Authority inspired by ADGM (Abu Dhabi Global Market) if you need to work with cryptos. Some of the requirements that need to be met according to this regulation include:

• You can only work with accepted crypto assets
• There must be risk management and disclosure
• You must keep information and funds secured with the management and disclosure measures you have put in place
• KYC is required to prevent fraudulent activities
• You must have capital resources that can stand for six months operational expenses


Taxation of cryptocurrencies in the UAE

Generally speaking, taxation of cryptocurrencies is not performed in the UAE, a factor that is highly favorable for entrepreneurs. The 0% tax rate applies to people receiving cryptocurrency as salary or using it for trading. There is a 5% VAT tax in the UAE and you can only know if your business is exempt from this or not by consulting a tax specialist.


Conclusion

UAE does not recognize cryptocurrency as legal tender and it is not a form of currency that receives too much talk-up. However, this should not discourage you from safely investing in cryptocurrency in the UAE, as it is not banned. Even better, it is pretty easy to buy and sell digital assets with the exchanges mentioned above. If you live in the UAE, you should not forget to secure your cryptocurrency investment using a trusted cold storage hardware wallet.