How to start a Cryptocurrency company in the UAE?

Over the past few years, the UAE financial market has seen radical changes in terms of digital payments, cryptocurrency, and financial services. Recently, the UAE government launched the Emirates Blockchain Strategy 2021 to boost the growth of the digital asset industry and organize transactions via the blockchain program. 

Your ultimate guide to being in the Crypto-Market

What is Cryptocurrency in general terms?

In simplified terms, Cryptocurrency is a decentralized monetary value that exists digitally and virtually. They operate through distributed ledger technology known as a blockchain and do not require the central authority to maintain this digital currency. Any payments made with a cryptocurrency wallet do not exist because they are not physical coins that can be transferred or exchanged. They only exist as digital entries to an online database, that keeps track of all cryptocurrency transactions that involve digital transfers. 

Cryptocurrency coins are described as the money of the future, and a very vulnerable asset to hold. Hence, it triggered a worldwide interest among consumers and investors in reliability, safety measures, and how to access such a unique yet complicated technology. Many have argued that cryptocurrencies, being a superior form of value transfer, offer privacy, security, and durability which traditional money does not offer. 

Overview of Cryptocurrency business in Dubai

The UAE has always been technologically very savvy and active, and the emergence of cryptocurrency further accelerated the digitization of the financial sectors. As a global investment hub, the government of Dubai has been carefully observing the growth of cryptocurrency and has now announced the desire and ambition to become a leading crypto hub by 2025. 

Many new investors are looking to dive into the crypto business in Dubai, and to facilitate this development, the government has released a cryptocurrency license in the UAE. Several Freezones are allowing businesses to be involved in bitcoin trading, crypto trading, crypto asset management, and other related activities. 

Major Highlights of Cryptocurrency in the UAE

• BitOasis, established in 2015 and headquartered in the UAE, is the largest and most trusted cryptocurrency platform in the Mena region. This platform was built to allow users a secure and compliant way to buy, sell, and trade cryptocurrencies in the Middle East.
• The Central Bank of the UAE (CBUAE) started regulating cryptocurrency in 2017. The law stated that all digital assets transactions had to be made through authorized exchanges and had to abide by the Anti-Money Laundering regulations set by them. 
• In 2018, the Financial Services Regulatory Authority (FSRA) under the Abu Dhabi Global Markets (ADGM) became the first regulator to issue comprehensive cryptocurrency guidelines and understand the implications on the broader economy. 
• In 2020, under the Securities and Commodities Act (SCA), the Crypto Assets Activities Regulation (CAAR) was issued at the federal level regulating the listing, issuing, offering, and trading of crypto assets in the UAE market. Foreign investors looking to set up their crypto business will need to obtain a No Objection Certificate (NOC) from the SCA. 
• In May 2021, the Dubai Multi Commodities Freezone (DMCC) and the Dubai Airport Freezone (DAFZA) launched a Crypto Centre after signing an agreement with the SCA, integrating cryptocurrency trading (with recognized regulations) in the UAE. 
• In September 2021, the SCA signed an agreement with the Dubai World Trade Centre (DWTC) to boost and support the trading of crypto assets. 
• In early 2022, Dubai introduced the Virtual Assets Law which applies to the services of virtual assets throughout Dubai’s special developments and Freezones, except the Dubai International Financial Centre (DIFC). 
• ETORO is the top cryptocurrency exchange in the UAE and consists of more than 70 cryptocurrencies such as Bitcoin, Ethereum, Shiba Inu, etc. The crypto exchange supports these coins for various purposes – PayPal, bank transfers, SEPA, etc. 

Is Cryptocurrency legal in the UAE?

Based on the above facts, we can emphasize that it is perfectly legal to set up a fully licensed cryptocurrency exchange business in the UAE. The important criteria you must follow is trading your business funds for your gain, not by acting as a broker. Also, remember that an existing UAE business cannot add cryptocurrency as an additional activity to its existing business license. On the contrary, if you are already running a business in the UAE, it is possible to add cryptocurrency trading as a business activity, but under a separate business license, under the approval of the SCA. 

Steps to start a Cryptocurrency company in the UAE

Decide a name for your company:

A new business startup will require a name that should adhere to the government’s regulations; should not match any existing trades; should not relate to any offensive details and should be precise and original. 

Selecting your business zone:

You must choose either one of the jurisdictions to start your crypto business. A mainland company formation requires you to collaborate with a local sponsor. Whereas Freezone company formation will give you the benefits of – zero currency restrictions, and capital and profit repatriation. 

Register for a cryptocurrency license: 

After the above fulfillments, obtaining a business license is the most important factor for a crypto business. You must fill up the cryptocurrency form from the respective authority, where you want to set up your business. You must submit and attach this form with the company’s name and shareholder’s details. After submission, you must make the payment and you will receive your license within a week of approval. 

Meet the compliance regulations:

 The cryptocurrency business is regulated in a similar way as any other financial trading in the UAE. Hence, it is very important that you receive the correct license and comply with all the anti-money laundering regulations. 

Cryptocurrency License in Dubai

Foreign investors can now start up a business in Dubai under two unregulated business license options – Proprietary trading in Crypto-commodities, or Distributed Ledger Technology Services. 

Proprietary trading in crypto-commodities is the buying and selling of crypto-commodities developed on distributed ledger technology applications known as Blockchain. However, this license does not include activities such as acting as an exchange, providing brokerage services, financial services, payment processing, or storage services.

You can obtain these licenses from these Freezones – the Dubai Multi-Commodities Centre (DMCC), the Dubai Airport Freezone Authority (DAFZA), and the Abu Dhabi Global Market (ADGM). 

How can INCORP help you?

INCORP understands the requirements and technicalities of how critical a cryptocurrency business and its trading can be. We can guide you through the entire process, from the initial stage to how to successfully manage your business in the UAE.