VARA Enhances Customer Protection for Bitcoin and Other Cryptocurrency Transactions in Dubai

17 Aug, 2023

VARA Enhances Customer Protection for Bitcoin and Other Cryptocurrency Transactions in Dubai.

Dubai residents using Bitcoins or other cryptocurrencies for property purchases or retail transactions must exercise caution to comply with the newly strengthened regulations on virtual assets.

As Dubai intensifies its guidelines on virtual asset usage, consumers are set to benefit from enhanced protection in all transactions involving virtual assets.

"To ensure compliance, businesses and individuals should familiarize themselves with the new guidelines for crypto use in these contexts (B2C transactions)," advised Niraj Jain, UAE Practice Lead at Indigenesis Consulting.

He emphasized the importance of aligning with the Financial Action Task Force (FATF) standards on anti-money laundering and combatting the financing of terrorism (AML/CFT).

In essence, transactions involving Bitcoins and other cryptocurrencies now face the same stringent requirements as those in traditional banking sectors. Whether it's paying for a hotel stay or buying a latte, both businesses and individuals involved must ensure adherence to these regulations.

Dubai's Virtual Asset Regulatory Authority (VARA) is enhancing compliance procedures and expanding rule coverage. In collaboration with the Dubai Department of Economy & Tourism, VARA aims to implement end-to-end processes that uphold market-leading consumer protection and security standards.

These measures extend to virtual asset transactions both on the mainland and in free zones, coinciding with Dubai's transition of its virtual asset ecosystem to the full regulatory scope of VARA.

For businesses dealing with virtual assets, complete transparency is the ultimate goal. Regulatory bodies aim to further tighten rules as necessary. Bal Krishen, Chairman and CEO of Century Financial, emphasized that the DET and VARA guidelines seek to regulate and provide an overarching framework for Virtual Asset Service Providers.

These guidelines go beyond merely catering to investors trading in these assets through licensed platforms.

Entities qualifying for a regulated Full Market Product (FMP) License must make the transition to a VARA-regulated framework by August 31.

These comprehensive guidelines cover not just trading dynamics, but also encompass the methods through which individuals and businesses can participate in transactions involving cryptocurrency-based assets.

As per the VARA agreement, the Dubai Department of Economy & Tourism will integrate VARA's operations into its system for issuing virtual asset licenses.

DET will conduct inspections and provide assistance to VARA in implementing on-site enforcement actions, which could entail penalties like suspensions or revocations in cases of verified negligence or non-compliance with VARA regulations.

DET's E-Permit system will feature VARA, allowing streamlined approvals for virtual asset events. Both entities will collaborate on campaigns to raise awareness about consumer protection in the virtual asset space.

The Dubai Corporation for Consumers Protections & Fair Trade department within DET will be equipped with specialized VA expertise to ensure a transparent and seamless customer experience, enhancing consumer protection.

By incorporating VARA activities, DET aims to issue new licenses. The enhanced collaboration facilitates VARA's ability to work seamlessly with global regulators concerning digital and virtual assets, reflecting Dubai's commitment to a pro-business and pro-growth environment for all stakeholders.