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Welcome to the first installment of our crypto regulation newsletter series. Over the coming editions, we’ll dive into specifics — licensing, governance, compliance, and more — focusing primarily on the UAE. In this brief kickoff, we’ll sketch out the global regulatory environment and then zoom in on how the United Arab Emirates is approaching digital‐asset oversight. Think of this as your crash course on “why regulation matters” and “how things look today,” before we unpack the details in future issues.
Global Snapshot: A Broad-Brush Overview
Global cryptocurrency regulation remains highly fragmented, reflecting diverse national priorities ranging from fostering innovation to ensuring financial stability. While some jurisdictions like the United States, the UK, the European Union, and Japan, have recognized and introduced comprehensive licensing and taxation frameworks on virtual digital assets, including cryptocurrency, others, such as China, have maintained a blanket ban on all cryptocurrency trading and mining operations. In the context of India, the cryptocurrency framework is yet not regulated and is still evolving, with the cryptocurrencies being recognized as “virtual digital assets” and subject to taxation, whose capital gains are taxable at a flat 30% whereas TDS is deducted at 1% of sale consideration. Similarly, across other markets—South Korea, Brazil, South Africa, and the UAE—authorities have introduced licensing regimes obligating the virtual assets service providers (VASPs) to register, impose AML/KYC safeguards, and report large transactions on an ongoing basis.
Thus, across major economies, regulators have been taking steps towards balancing consumer protection, adherence to anti–money laundering (AML) and combating the financing of terrorism (CFT) protocols, and market integrity against the perceived benefits of digital-asset adoption.
United Arab Emirates: Building a Crypto Hub
The UAE’s approach to cryptocurrency regulation has evolved into a multi-layered framework that balances innovation with robust oversight. At the federal level, the Central Bank of the UAE (CBUAE) introduced the Payment Token Services Regulation in early 2025, explicitly defining “payment tokens” (including stablecoins) and requiring licensure for issuance, conversion, custody, and transfer activities within the UAE. Simultaneously, the Securities and Commodities Authority (SCA) maintains federal oversight of certain virtual asset classifications and collaborates with free-zone regulators to ensure consistency— most prominently Dubai’s Virtual Assets Regulatory Authority (VARA) and Abu Dhabi’s ADGM (Abu Dhabi Global Market).
All virtual asset service providers (VASPs) must be licensed either by the SCA (for onshore/UAE-wide activities) or by VARA (for Dubai, including free zones under DWTC); Dubai‐licensed VASPs are automatically registered with SCA, whereas providers outside Dubai must directly secure SCA approval. In ADGM, the Financial Services Regulatory Authority (FSRA) has governed VASPs since 2018, having broadened its mandate to address NFTs, DeFi, and decentralized autonomous organizations (DAOs).
In Dubai, the VARA was established under Law No. (4) of 2022—oversees all virtual asset activities outside the Dubai International Financial Centre (DIFC) and operates tailored rulebooks for custodial staking and issuances, thereby bolstering investor protections and market integrity. Meanwhile, the Dubai Financial Services Authority (DFSA) enforces its regulatory regime within the DIFC, encompassing security token offerings, custody services, and updated AML/CFT requirements. Accordingly, all VASPs intending to operate within the DIFC must obtain a license to conduct financial services in relation to crypto tokens, whereas existing authorized firms must apply for a variation to include these activities.
Within the UAE, all VASPs are subject to stringent AML Laws, requiring comprehensive AML/CFT policies, KYC procedures, transaction monitoring, and sanctions screening. Marketing and promotional materials need pre-approval, must be clear, accurate, non-misleading, and include prominent risk disclosures. Enforcement is backed by the cybercrime law in the UAE, which criminalizes unlicensed crypto trading and related fraud.
Through these concerted efforts, the UAE has emerged as a global leader in virtual asset regulation. ADGM was among the first jurisdictions worldwide to codify a comprehensive VASP framework in 2018, while VARA’s rapid updates in early 2025—particularly its fiat-referenced asset rules and streamlined licensing (including default SCA registration)— position Dubai at the forefront of regulatory best practices. Moreover, the introduction of the RAK Digital Assets Oasis in February 2025, the world’s first free zone dedicated exclusively to virtual asset enterprises, underscores the UAE’s commitment to fostering a supportive ecosystem for cryptocurrencies and demonstrates how its regulatory vision not only aligns with international norms but also actively shapes them.
Key Takeaways
Global Regulatory Regime
As of mid-2025, the global regulatory regime for cryptocurrencies oscillates between permissive innovation hubs (e.g., Japan, EU, USA) and stringent prohibitions (e.g., China).
Major economies emphasize AML/KYC, consumer protection, and tax transparency, while grappling with how to balance innovation and systemic risk. With India expected to formalize its approach imminently, and other nations refining licensing or tax frameworks, the regulatory environment will likely converge on core principles—licensing, transparency, consumer safeguards, and AML—while allowing differentiated market-access models aligned with each jurisdiction’s strategic priorities.
UAE’s Multi-Pronged Approach
At the federal level, the SCA has set broad definitions and AML rules. In parallel, free zones like ADGM, DIFC, and now VARA in Dubai have fashioned more detailed, innovation-friendly rules that aim to attract global crypto businesses. Investors and traders need to know which platforms are properly licensed (federal SCA vs. free-zone regulator) to feel confident that their assets are safeguarded. Startups & Token Issuers must decide where to incorporate— ADGM, DIFC, or under VARA in Dubai—based on capital requirements and local presence. Accordingly, the legal & compliance teams will need to map out licensing checklists, AML/CFT workflows, and ongoing reporting requirements before launching any crypto venture in the region.
Disclaimer: All views expressed in this article are solely for informational purposes and should not be construed as legal advice. This information is for reference only and is bound to change in case of any amendments or changes to applicable laws. We do not assume any responsibility or liability for any errors or omissions in the content of this article, and we do not make any warranties about the completeness, reliability, and accuracy of the information expressed in this article.
