The UAE Federal Cabinet has issued Cabinet Decision 111 of 2022, concerning the regulation of virtual assets (the Virtual Assets Decision). The Virtual Assets Decision was issued on 12 December 2022 and will come into force 30 days following its publication in the Official Gazette.
The Virtual Assets Decision aims to regulate virtual assets and virtual asset businesses at a Federal level in the UAE. It is anticipated that the Virtual Assets Decisions and any implementing regulations issued pursuant to it will operate together with Emirate-level regulations (such as those issued by the Virtual Assets Regulatory Authority in the Emirate of Dubai).
The Virtual Assets Decision requires (this is not an exhaustive list) that businesses within its scope:
- implement measures to safeguard data in accordance with current global cybersecurity standards and technological best practices;
- have sufficient capital and satisfy any further or specific requirements imposed by law (including any prescribed by the Emirates Securities and Commodities Authority where relevant);
- provide sufficient information involving the risks concerning investments or dealings in virtual assets in a clear, fair and not-misleading manner;
- comply with Federal Decree-Law 20 of 2018 concerning anti-money laundering, as well as the guidelines and recommendations issued by the Financial Action Task Force; and
- notify the concerned authorities in the event of a security risk, security breach, or any activity that falls within the scope of electronic crimes.
The introduction of federal legislation concerning the regulation of virtual asset businesses is a welcome development and should go some way in establishing a common standard for the regulation of such businesses across the United Arab Emirates. As with all such legislation, it remains to be seen how the Virtual Assets Decision will be enforced and applied in practice.