UAE Technology / Fintech LawCabinet Resolution No. (111) of 2022 Regulating Virtual Assets and the Related Service Providers

Article (1) Definitions Whenever mentioned in this Resolution, the following words and expressions shall bear the meanings assigned thereto respectively, unless the context requires otherwise: UAE : The United Arab Emirates SCA : The Securities and Commodities Authority CBUAE : The Central Bank of the UAE

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Cabinet Resolution of 2022 Regulating Virtual Assets and the Related Service Providers 2 Local Licensing Authorities : The local licensing authority vested with the authority to regulate the virtual assets (VAs) in the emirate concerned. Free Zones [FZs] : Any free zone established or is being established inside the UAE under any federal or national statute. Financial Free Z…

Article (2) Objectives of the Resolution This Resolution aims to: 1. Develop the legislative system for the VA sector in the UAE as well as the relevant activities and VASPs in a manner that defines and guarantees the rights and duties of all the parties concerned; 2. Regulate the VA Sector in the UAE as well as the relevant activities and VASPs; 3. Ensure compliance by the VA Sector in the UAE with all provisions of Federal Decree Law No. (20) of 2018 concerning Anti-Money Laundering and Countering the Financing of Terrorism and Non-legitimate Organizations, as amended, and its Executive Regulation, as well as the applicable legislation related to the sector; 4. Support the UAE Government's…

Article (3) Scope of Application 1. Provisions of this Resolution shall apply to: a. VA sector in the UAE, including the FZs; b. VA Activities in the UAE, including the FZs detailed in Article (5) of this Resolution; and c. VASP in the UAE, including the FZs; 2. Provisions of this Resolution shall not apply to: a. Regulating the VAs inside FFZs and all relevant transactions; b. Digital securities and contracts of digital commodities which are governed by their

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Cabinet Resolution of 2022 Regulating Virtual Assets and the Related Service Providers 4 own regulations issued by the SCA; and c. VAs used for payment, including the SVF which fall within the competence of the CBUAE, e…

Article (4) General Provisions 1. It shall be prohibited for any person to engage in the VA Activities in the UAE without obtaining approval and a license either from the SCA or the local licensing authorities, as applicable, pursuant to provisions of this Resolution. 2. Whoever desires to carry on VA Activities shall have the UAE as its domicile for carrying on its activities and shall take one of the legal forms approved by the local authorities concerned with commercial licenses. 3. Whoever desires to carry on VA Activities shall obtain necessary initial approvals and permits either from the SCA or the local licensing authorities, as applicable, before proceeding with licensing procedures…

Article (5) VA Activities Subject to Licensing 1. The following activities shall be licensed and overseen by the SCA pursuant to provisions of this Resolution: a. Providing VA Platforms operation and management services; b. Providing exchange services between one or more forms of VAs; c. Providing VA transfer services; d. Providing brokerage services for trading of VAs; and

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Cabinet Resolution of 2022 Regulating Virtual Assets and the Related Service Providers 5 e. Providing VA custody and management services and enabling control over VAs; 2. Based on the proposition of the SCA, the Cabinet may, in coordination with the local licensing authorities and the CBUAE, amend the acti…

Article (6) Functions of the SCA 1. For the purpose of implementing this Resolution, the SCA shall: a. Supervise and control the VA Activities, VASPs, and VA transactions conducted inside the UAE including the FZs; b. Issue the resolutions required to regulate VA transactions, and licensing the VASP, and specify their work mechanism; c. Verify the compliance by VASP with the application of the personal data protection legislation in force in the UAE; d. Issue necessary instructions and guidelines, in coordination with the entities concerned, to formulate the mechanism required for evaluating and monitoring VASPs, and to develop the actions and measurements to be taken against suspicious tran…

Article (7) Minimum Requirements to Be Met in VA Sector 1. Upon granting licenses to VASPs, the SCA shall ensure that: a. Neither the applicant nor any partner thereof has its name included in the sanctions lists or terrorist groups lists issued by the official entities in the UAE or by international organizations recognized by the UAE, including, in particular, the organizations concerned with anti-money laundering and countering the financing of terrorism and non-legitimate organizations; nor be a subject of criminal investigations inside or outside the UAE at the time of submission or consideration of the registration application; nor be convicted under a final judgment of a crime involvi…

Article (8) Compliance with Legislation Concerning Anti-Money Laundering and Countering the Financing of Terrorism and Illegal Organizations All VASPs in the UAE shall comply with all applicable legislation concerning anti-money laundering and countering the financing of terrorism and illegal organizations, and the resolutions issued in implementation of the said legislation.

Article (9) Obligations of and Oversight over the Local Licensing Authorities 1. Local licensing authorities shall provide the SCA with all data and information pertaining to the VASPs, the licenses granted to them, and transactions related to these VAs upon request of the SCA to ensure compliance with the applicable legislation and international standards. 2. The SCA has the power to supervise and oversee the VASPs licensed in the UAE including those licensed by the local licensing authorities; and 3. The SCA shall manage coordination among the various local licensing authorities, the CBUAE, and the entities concerned in order to exchange information and hold events necessary to raise the a…

Article (10) International Representation at Organizations and Events Without prejudice to the CBUAE's powers under the legislation applicable to the FZs, the SCA shall be competent to participate in organizations and events related to VAs which require representation of the UAE, and is authorized to invite local licensing authorities and the entities concerned to participate in the said organizations and events.

Article (11) Fees In consideration of granting the licenses and approvals and provision of services in accordance with provisions of this Resolution and the resolutions made under this

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Cabinet Resolution of 2022 Regulating Virtual Assets and the Related Service Providers 8 Resolution, the SCA shall collect the fees and commissions to be defined under a cabinet resolution, provided that no duplication of fees shall be taken into consideration, that is, the fees collected by the local licensing authorities in return for the services provided under provisions of this Resolution may not be paid twice.

Article (12) Violations and Penalties In coordination with the local licensing authorities and the Ministry of Finance, and after obtaining the Cabinet's approval, the SCA shall make a decision defining the administrative violations and penalties in respect of the actions committed in violation of the provisions of this Resolutions and the resolutions made under this Resolution. The said decision shall define the powers of the SCA or the local licensing authorities, as applicable, to impose one or more of the following penalties: 1. Serve a warning; 2. Suspend a listing or trading of VAs; 3. Suspend the use of technologies used by VASPs related to VAs and adopt the alternative means; 4. Susp…

Article (13) Grievances Whoever sustains a penalty may file a grievance with the Chairman of the SCA or his/ her authorized delegate, against any penalty or administrative measure imposed on it pursuant to provisions of this Resolution. The same shall be filed according to the procedures adopted by the SCA.

Article (14) Adjustment of Affairs All VASPs in the UAE who are licensed before the entry of this Resolution into force shall adjust their own affairs and shall satisfy all operational requirements and conditions pursuant to provisions of this Resolution, within (3) three months as of the date of entry of this Resolution into force. The SCA may extend this time limit as required by the public interest.

Article (15) Delegation Based on the proposition of the SCA, the Cabinet may delegate any of the SCA's functions included in this Resolution to any of the local licensing authorities, if any, in accordance with the rules set by the Cabinet.

Article (16) Implementing Resolutions In coordination with the local licensing authorities and the entities concerned, the Board of the SCA shall issue the resolutions necessary for implementation of this Resolution.

Article (17) Repeals All and any provisions shall be repealed insofar as they go against the provisions of this Resolution.

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Article (18) Publication and Entry into Force This Resolution shall be published in the Official Gazette and shall enter into force (30) thirty days following the date of its publication. Mohammed bin Rashid Al Maktoum The Prime Minister Issued by us: On: 18th of Jumada Al Awwal, 1444 A.H. Corresponding to: 12th of December, 2022.

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