Introduction.
In the world of cryptocurrencies and blockchain technologies, the UAE takes a leading position, offering innovative solutions and attractive conditions for the development of cryptocurrency projects.
One of the key aspects of successful activity in this area is the availability of appropriate licenses. In this article, we will look at the different types of cryptocurrency licenses in the UAE by economic zone, their differences and advantages, to help entrepreneurs and investors understand this important theme.
One of the key aspects of successful activity in this area is the availability of appropriate licenses. In this article, we will look at the different types of cryptocurrency licenses in the UAE by economic zone, their differences and advantages, to help entrepreneurs and investors understand this important theme.
Objectives of activities:
establishing a regulatory framework for companies offering, issuing, listing and trading cryptoassets with the DMCC;
providing access to individual licenses offered by the DMCC Cryptocurrency Center;
creating an integrated ecosystem for the crypto and blockchain industry;
growth of the sector and development of blockchain applications in Dubai;
development of centralized oversight.
Types of licenses:
The following license categories are available in the DMCC Free Zone:
a) Trading License: to carry out the trading activities specified in the License;
b) Service License: to carry out the service activities specified in the License;
(c) Industrial License: to engage in the manufacturing activities specified in the License;
(d) Such other category of license as may be determined or granted, as the case may be, by the Registrar. as the case may be, by the Registrar from time to time.
For example, a cryptolicense involves the following activities:
Includes facilities that provide services for arranging the purchase and sale of digital assets between two facilities by receiving or accepting orders for virtual assets, accepting currency or other virtual assets for such orders, facilitating the matching of virtual asset transactions between buyers and sellers, and entering into virtual asset transactions as a seller on behalf of a customer.
Includes firms engaged in developing and hosting digital virtual environments that enable simulated interactions between individuals. Companies engaged in these activities are not permitted to issue tokens that are traded on exchanges or trade cryptocurrency commodities.
The license allows for:
cryptocurrency trading;
exchange of cryptoassets;
investment activities with cryptoassets.
Benefits of DMCC:
0% income tax;
100% repatriation of profits to the home country is allowed;
possibility of obtaining a dual license.
Types of licenses:
The following license categories are available in the DMCC Free Zone:
a) Trading License: to carry out the trading activities specified in the License;
b) Service License: to carry out the service activities specified in the License;
(c) Industrial License: to engage in the manufacturing activities specified in the License;
(d) Such other category of license as may be determined or granted, as the case may be, by the Registrar. as the case may be, by the Registrar from time to time.
For example, a cryptolicense involves the following activities:
The license allows for:
Benefits of DMCC:
Objectives of activities:
Supporting the fairness of transparency and efficiency of the market;
Ensuring a safe and efficient infrastructure;
Enhancing financial stability;
- Integrity of the financial system;
Preventing and combating actions that could damage reputation;
Ensuring an adequate degree of protection.
The Regulated Virtual Asset Activity License allows for one or more virtual asset activities, including:
Operating a multilateral trading facility (MTF);
Providing custody;
Buying, selling or exercising any rights (as principal or agent);
Managing assets owned by another person;
Entering into agreements with another person (as principal or agent);
Buying, selling or securing assets Marketing;
Advising on the merits of the purchase or sale of assets or any rights conferred by such purchase or sale.
Doing business with crypto-assets involves:
broker-dealer activities;
acting as a custodian of cryptoassets;
managing a crypto exchange.
Among the requirements to obtain a license with the ADGM:
capital ownership;
disclosure of information as required by the regulator;
financial data protection;
Compliance with KYC regulations (a set of procedures for verification (confirmation of identity) of the client and verification of the origin of his funds).
Types of licenses:
Category 1 - Banks: Accepting deposits, managing PSIAu;
Category 2 - Market Maker, Credit Provider: Handling investments as principal, making loans;
Category 3A - Brokerage: Handling investments as principal, managing investments as agent;
Category 3B - Custodian: Safeguarding the assets of the Fund, acting as trustee of the Fund;
Category 3C - Asset Manager, Fund Manager: Asset management, Managing collective investment fund, Providing custody services, Managing PSIAr, Providing trust services;
Category 4 - Investment Consultant, Insurance Consultant: Arranging investment transactions, Arranging lending and credit counseling, Advising on financial products, Arranging custody, Insurance intermediation, Insurance management, ATS management, Fund management, Providing trust services, Crowdfunding platform management;
Category 5 - Islamic Business.
For example, in the cryptocurrency sector, an ADGM license of Category 3C - Collective Investment Fund Management / Asset Management is acceptable.
An authorized firm in this category may be licensed to provide one or more of the financial services of managing a Collective Investment Fund, managing assets, providing trust services as trustee of a direct trust, providing custody services (other than for a fund), and managing an investment account for profit sharing (received on a limited basis). An authorized firm holding a 3C license may also provide Category 4 financial services, but may not provide Category 1, 2, 3A or 3B financial services.
An ADGM license is issued for the following types of licenses:
Access to a skilled and diverse talent pool based in Abu Dhabi;
0% income tax and corporate tax;
100% foreign ownership allowed;
Simplified export and import policy;
Possibility to have a virtual office;
English common law legal framework;
No certification of corporate documents required.
The Regulated Virtual Asset Activity License allows for one or more virtual asset activities, including:
Doing business with crypto-assets involves:
Among the requirements to obtain a license with the ADGM:
Types of licenses:
Category 1 - Banks: Accepting deposits, managing PSIAu;
Category 2 - Market Maker, Credit Provider: Handling investments as principal, making loans;
Category 3A - Brokerage: Handling investments as principal, managing investments as agent;
Category 3B - Custodian: Safeguarding the assets of the Fund, acting as trustee of the Fund;
Category 3C - Asset Manager, Fund Manager: Asset management, Managing collective investment fund, Providing custody services, Managing PSIAr, Providing trust services;
Category 4 - Investment Consultant, Insurance Consultant: Arranging investment transactions, Arranging lending and credit counseling, Advising on financial products, Arranging custody, Insurance intermediation, Insurance management, ATS management, Fund management, Providing trust services, Crowdfunding platform management;
Category 5 - Islamic Business.
For example, in the cryptocurrency sector, an ADGM license of Category 3C - Collective Investment Fund Management / Asset Management is acceptable.
An authorized firm in this category may be licensed to provide one or more of the financial services of managing a Collective Investment Fund, managing assets, providing trust services as trustee of a direct trust, providing custody services (other than for a fund), and managing an investment account for profit sharing (received on a limited basis). An authorized firm holding a 3C license may also provide Category 4 financial services, but may not provide Category 1, 2, 3A or 3B financial services.
An ADGM license is issued for the following types of licenses:
- Conducting brokerage operations;
- Buying and selling cryptoassets for one's own account;
- Consulting on cryptocurrency transactions;
- Activity of cryptoexchange and “custodian of cryptoassets”.
Objectives of activities:
providing an environment for the development of ecosystems;
creation of a new sector in the UAE economy;
investor protection;
overseeing a world-class regulatory framework in the field of legislation;
ensuring the reliability of cryptocurrency exchanges.
To obtain a DWTC license, applicants must meet the requirement to obtain a Virtual Asset Service Provider (VASP) license from the Virtual Asset Regulatory Authority (VARA) in conjunction with an operating license from the DWTC Authority to ensure compliance with regulatory standards.
Types of licenses:
general trading license;
professional license;
event management license;
business license.
In order to obtain a cryptolicense:
Obtaining a license from VARA;
Obtaining an operating license from the DWTC Authority;
The applicant needs to submit all documents listed on the DWTC Authority portal, along with any additional documents or information that may be subsequently requested.
The Regulated Virtual Asset Operating License allows for the following activities:
Advisory services;
Broker-dealer services;
Depository services;
Currency exchange services;
Lending and borrowing services;
Asset and investment management services;
Proprietary trading.
For example, broker-dealer services include placing orders to buy and sell virtual assets between two legal entities; soliciting or accepting orders for virtual assets and accepting fiat currency or other virtual assets for such orders; facilitating the matching of virtual asset transactions between buyers and sellers; and providing placement, distribution, or other issuance services.
Among the requirements:
creating a business plan describing the business;
collecting and formalizing information about the staff;
selecting an address for the project;
capital formation;
AML/KYC implementation;
obtaining a VARA and DWTC license.
Advantages of DWTC:
flexible conditions for doing business;
high degree of industry transparency;
favorable taxation conditions, 0% corporate tax;
possibility of hiring foreign employees.
To obtain a DWTC license, applicants must meet the requirement to obtain a Virtual Asset Service Provider (VASP) license from the Virtual Asset Regulatory Authority (VARA) in conjunction with an operating license from the DWTC Authority to ensure compliance with regulatory standards.
Types of licenses:
In order to obtain a cryptolicense:
The applicant needs to submit all documents listed on the DWTC Authority portal, along with any additional documents or information that may be subsequently requested.
The Regulated Virtual Asset Operating License allows for the following activities:
For example, broker-dealer services include placing orders to buy and sell virtual assets between two legal entities; soliciting or accepting orders for virtual assets and accepting fiat currency or other virtual assets for such orders; facilitating the matching of virtual asset transactions between buyers and sellers; and providing placement, distribution, or other issuance services.
Among the requirements:
Advantages of DWTC:
Objectives of activities:
increasing the investment attractiveness of the region;
business structuring;
Development of Dubai as a center of blockchain technology;
legitimization of the cryptocurrency industry.
Types of licenses:
Commercial;
Industrial;
Professional;
For consulting services;
Service;
General trading.
Cryptocurrency requires an IFZA Crypto license. There are 5 types of licenses in total:
Crypto trading license;
License for cryptocurrency consulting;
License for crypto wallet services;
Crypto Exchange License;
License for crypto asset management.
To obtain a crypto-license you need to: develop a business plan;
submit an application to the licensing authority.
Advantages of IFZA:
favorable taxation conditions;
0% corporate and income tax;
100% foreign ownership allowed;
access to world markets by sea, land and air;
partnership with key UAE banks.
Types of licenses:
Cryptocurrency requires an IFZA Crypto license. There are 5 types of licenses in total:
To obtain a crypto-license you need to:
Advantages of IFZA:
The procedure for obtaining authorization:
write a regulatory business plan;
make an application;
become DFSA approval;
fulfill the requirements of the AML/CFT policy;
comply with KYC procedures;
meet the security requirements for digital assets.
Crypto asset entities include Virtual Asset Service Provider (hereinafter - VASP).
Types of licenses are the same as in ADGM:
Category 1 - Banks: Accepting deposits, managing PSIAu;
Category 2 - Market Maker, Credit Provider: Handling investments as principal, extending credit;
Category 3A - Brokerage: Handling investments as principal, managing investments as agent;
Category 3B - Custodian: Safeguarding the assets of the Fund, acting as trustee of the Fund;
Category 3C - Asset Manager, Fund Manager: Asset management, Managing collective investment fund, Providing custody services, Managing PSIAr, Providing trust services;
Category 4 - Investment Consultant, Insurance Consultant: Arranging investment transactions, Arranging lending and credit counseling, Advising on financial products, Arranging custody, Insurance intermediation, Insurance management, ATS management, Fund management, Providing trust services, Crowdfunding platform management;
Category 5 - Islamic Business.
Advantages of DIFC:
0% income tax;
100% repatriation of profits to the home country is allowed;
0% tax on profits, capital or assets until 2054;
regulatory independence;
geographical location;
support for cross-border activities.
Crypto asset entities include Virtual Asset Service Provider (hereinafter - VASP).
Types of licenses are the same as in ADGM:
Category 1 - Banks: Accepting deposits, managing PSIAu;
Category 2 - Market Maker, Credit Provider: Handling investments as principal, extending credit;
Category 3A - Brokerage: Handling investments as principal, managing investments as agent;
Category 3B - Custodian: Safeguarding the assets of the Fund, acting as trustee of the Fund;
Category 3C - Asset Manager, Fund Manager: Asset management, Managing collective investment fund, Providing custody services, Managing PSIAr, Providing trust services;
Category 4 - Investment Consultant, Insurance Consultant: Arranging investment transactions, Arranging lending and credit counseling, Advising on financial products, Arranging custody, Insurance intermediation, Insurance management, ATS management, Fund management, Providing trust services, Crowdfunding platform management;
Category 5 - Islamic Business.
Advantages of DIFC:
In the UAE, there are several types of economic zones that issue licenses for cryptocurrency projects, each of which has its own characteristics and advantages. Opening a company in the UAE with the appropriate cryptocurrency license can provide many opportunities for successful business development in this dynamic industry.
Choosing the right license can provide not only legal conduct of business, but also access to international markets and investment opportunities. With all the above in mind, choosing the right cryptocurrency license in the UAE is a key step to successfully participating in the global cryptocurrency ecosystem.
Choosing the right license can provide not only legal conduct of business, but also access to international markets and investment opportunities. With all the above in mind, choosing the right cryptocurrency license in the UAE is a key step to successfully participating in the global cryptocurrency ecosystem.
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