UAE’s Capital Market Authority (CMA), on Monday, issued its set of guidelines to oversee the crypto sector. This Virtual Assets Framework has been designed to comply with the standards set by the International Organization of Securities Commissions (IOSCO) and the Financial Action Task Force (FATF).
Dubai was among the first nations in the world that had established a regulatory framework around crypto in 2021. With this, the UAE has emerged as a hotspot of crypto activities. Owing to this expansion in the industry, the CMA deemed it necessary to amp up market integrity and investor protection provisions with clear licensing, compliance, and risk management criterias.
These rules will be deployed across the UAE uniformally.
Understanding the guidelines
The structure of these guidelines is supported on five core modules. These include general requirements, conduct of business, alternative trading system, prudential requirements along with anti-money laundering (AML) and counter terror financing (CTF).
“Among its core modules, the framework includes a dedicated Alternative Trading System module, which regulates trading facilities,” the CMA said. “This module is not limited to regulating a trading facility dedicated to virtual assets, but also extends to conventional multilateral trading facilities for securities and multilateral trading facilities dedicated to tokenized securities.”
Under the framework, regulated crypto activities in the UAE bring firms offering crypto custody and investment deals along with those dealing in virtual assets as principal and agent assets under the regulatory umbrella. The rules will also govern crypto firms providing investment advice, portfolio management, and multilateral tading facilities in alignment with international standards.
The UAE government is essentially looking to better accomodate different types of business models with approproate risk assessment related to each activity.
The bringing of this Alternative Trading System module under the crypto regulatory umbrella can be called a standout feature of CMA’s guidelines. It would largely bridge the gap between traditional and digital finance by regulating conventional securities and tokenized assets the same way as digital assets.
“Virtual assets are reshaping how financial markets operate, and regulation must evolve at the same pace,” said H.E. Waleed Saeed Al Awadhi, CEO, CMA. “This framework establishes clear and comprehensive foundations for virtual asset activities in the UAE, enabling innovation to develop within a trusted environment that safeguards investors and upholds market integrity.”
International alignment
The CMA said that the UAE is taking these steps to secure its position as a global financial hub.
These new rules, as mentioned earlier, are aligned with those released by the IOSCO and the FATF. The crypto guidelines by both of these international agencies focus mainly on curbing financial crime that can be committed using cryptocurrencies.
The Paris-headquartered FATF, for instance, has directed crypto firms to obtain, hold, and transmit specific originator (sender) and beneficiary (recipient) information during any digital asset transfer over a certain threshold.
The IOSCO looks at the Market Conduct which believes that if a crypto firm acts like a stock exchange, it should be regulated the same. The Spain-based agency also prioritizes ensuring that a crypto firm does not mix its own money with its customers’ funds.