There are a lot of misconceptions and misunderstandings when it comes down to the cryptocurrency market in Dubai. Despite the innovative technology having existed for over 10 years, it is still a relatively new adoption in the Emirate — with many people still wondering if crypto trading is even legal.
With cryptocurrency’s popularity and influence growing ever-stronger, Dubai has sought to become a global leader in the field. As such, the Emirate has now fully-embraced digital currencies and unveiled a series of measures to help attract cryptocurrency businesses into the area.
All of this means now is the perfect time to set up operations in Dubai, something which Ruthberg is perfectly placed to assist with. In this article, we will outline everything you need to know about the crypto market and the steps you will need to go through to get started.
Is Cryptocurrency Legal in Dubai?
Any business that wishes to offer cryptocurrency trading to clients within the UAE can do so, provided it is incorporated within Dubai. This can either be done with a mainland corporation, or within a free zone. It is not possible for a company to be part of the cryptocurrency market in Dubai from abroad.
Cryptocurrency first became legal in Dubai following the publication of “The Authority’s Chairman of the Board of Directors Decision No. (21/R.M) of 2020 Concerning the Regulation of Crypto Assets” in November 2020. The document described the SCA’s licensing rules for anybody who wishes to offer crypto assets within the UAE.
It is important to note that the sale of crypto within the Emirates is highly regulated. Anybody offering these services must be licensed by the Security and Commodity Authority (SCA) and adhere to strict legislations surrounding money laundering, counter-terrorism financing, and cyber security.
Dubai Cryptocurrency Regulations
Gaining access to the cryptocurrency market in Dubai requires filling out legal documentation and adhering to strict laws of governance. These relate to how your licence is obtained, how long your expenses are visible for, and where your information should be stored.
It is important that all paperwork is completed accurately and the entire process is followed exactly as intended. This is why it is essential to seek specialist guidance at your earliest opportunity if you are ever unsure.
The requirements for obtaining a cryptocurrency licence in Dubai are as follows:
- Any purchased crypto assets must be incorporated with the United Arab Emirates Financial Free Zone.
- A clean criminal record is essential.
- All capital resources and operational expenses must be visible for the previous 12 months.
- A commercial licence must be issued by the Department of Economic Development (DED)
- All information must be secured within a crypto wallet.
- All relevant business members must provide valid passports.
Additionally, in November 2021, new cybercrime legislations were introduced as a part of wide-sweeping legal reforms by the President of the United Arab Emirates, His Highness Sheikh Khalifa bin Zayed Al Nahyan.
The new legislation states that anybody found to be promoting/encouraging the dealing of any cryptocurrency not officially recognised by the country, or dealing without a licence will be subject to punishment; either through detention, a fine between Dh20,000-Dh500,000, or both depending on the severity of the case.
Cryptocurrency related crime was at an all-time high in 2021. It is estimated that around $14 billion USD was lost to fraud around the world, almost double the amount of the previous year ($7.8billion USD). This new legislation ensures that the people of the UAE remain as secure in their trading as possible.
The Benefits of Cryptocurrency Trading in Dubai For Businesses
Cryptocurrency businesses that are set up in Dubai will likely be incorporated within a Dubai World Trade Centre Authority (DWTCA) free zone. This provides you with a number of potential benefits, such as networking opportunities, visa assistance, and relaxed rules on foreign ownership.
There are over 30 free zones in Dubai, with each one set up to offer tax concessions and custom duty benefits to expatriate companies and investors. Many of these free zones are focused on specific industry categories, meaning all companies that operate in a particular field will be grouped together.
Here are some of the important benefits a cryptocurrency business in Dubai can enjoy as part of a free zone:
The purpose of the Dubai free zones was to encourage foreign investment and promote the economic strength of the city. To make the area as attractive as possible to foreign investors and business owners, any company operating within a free zone will be eligible for total, 100% exemption from all types of tax. This includes Value Added Tax, Income Tax, Corporate Tax, Customs etc.
As part of the Emirate’s desire to attract foreign investment, Dubai’s free zones have made incorporating and running a business as convenient as possible. The process itself can be carried out in just a few days, which is incredibly efficient when compared to other jurisdictions in the region.
Free zone companies are also able to recruit freely and with less scrutiny. This is largely because the immigration services that operate within these areas are designed to operate efficiently and in a cost-effective manner.
Finding the perfect space for your business is also extremely straightforward. Office and workspaces are plentiful, making them ideal for startups.
Another important benefit that free zone businesses can enjoy is the freedom to be fully-owned by foreign nationals. In mainland Dubai, it is necessary for a UAE national to be installed in an executive position with the business — known as a sponsor. There is no such requirement for free zone companies, meaning they can be structured exactly how they want.
Dubai has invested heavily in making its free zones as desirable as possible. Each area is served by modern transportation systems, making connectivity quick and easy. There are also innovative communication systems and resources in place, making them ideal locations for startup businesses to thrive.
Emirates Blockchain Strategy 2021
Perhaps the most important benefit for businesses wanting to get involved with the cryptocurrency market in Dubai is the existence of the Emirate’s Blockchain Strategy. Announced in April 2018, it was created to capitalise on innovative blockchain technology and turn Dubai into a world-leader and hub for cryptocurrency activity.
Under the strategy, unique identification numbers will be given to customers that enable them to access their information and data securely on the blockchain. The measures are expected to save billions of Dirham, cut down on unnecessary paper waste, and save time. This new technology goes a long way to further establish the UAE’s position as one of the world’s most advanced and innovative economies.
On top of this, the mere fact that such a strategy exists in the first place is a huge turning point for the cryptocurrency industry as a whole. Long regarded with mistrust by Western governments and financial institutions, being embraced by such a forward-thinking and business-focused area like Dubai is groundbreaking.
Many high-profile companies within the industry are praising Dubai for their approach, with the CEO of Bittrex Global, Stephen Stonberg, describing the Emirate and the wider UAE as great places to set up a token project or run a cryptocurrency exchange.
How to Get Started with the Dubai Cryptocurrency Exchange
If you are wanting to get involved in the cryptocurrency market in Dubai, or the UAE as a whole, it is important that you get expert assistance you can trust. This is where Ruthberg can help.
We have all the experience and knowledge you need to incorporate your business and support you every step of the way. We provide a range of advisory services and are able to guide you whenever we are needed.
To us, client satisfaction is paramount. This is why we strive to offer an unbeatable level of service, no matter your requirements. With offices around the world, we are able to effectively work through the night for our clients and deliver a swift resolution. In addition, you can contact us in a variety of ways, such as by telephone, email, or even WhatsApp — whichever is most convenient for you. Get in touch with our team to find out more.