Introduction to Dubai DMCC Cryptocurrency License

Regarding ADGM (Abu Dhabi Global Market), cryptocurrency and Block Chain projects in the UAE are regulated by FSRA (Financial Services Regulatory Authority). This authority has issued guidelines on 133 Crypto 129 Currency 29 199.

Author: Wise Consulting, @wisefc1

Cover: Photo by Mohammed Nasim on Unsplash

Cryptocurrency projects are becoming increasingly popular and diversified. Ignoring this fact is no longer an option, so governments around the world must develop policies to regulate them. Initially, the UAE was one of the countries trying to ignore technological advancements. Today, it is one of the best countries for cryptocurrency projects. Based on our experience, we will particularly emphasize the advantages of the DMCC (Dubai Multi Commodities Centre) Free Zone.

To operate a legal cryptocurrency business, you need to obtain a cryptocurrency license in the UAE. It can be used to provide crypto-related services to clients, such as storing their coins. To obtain a cryptocurrency license in Dubai, you need to apply to DMCC. It should be noted that this license does not allow the launch of ICOs or the registration of crypto exchanges. However, this does not mean that exchanges and ICOs are illegal in the UAE. The focus here is on how to properly arrange such activities and overcome potential difficulties. We will discuss this in more detail later.

In the Legal Cryptocurrency Business

Legislation and Regulatory Authorities for Cryptocurrency in the UAE

Regarding ADGM (Abu Dhabi Global Market), cryptocurrency and Block Chain projects in the UAE are regulated by FSRA (Financial Services Regulatory Authority). This authority has issued guidelines on 133 Crypto 129 Currency 29 199. It also monitors Block Chain enterprises to ensure transparency and prevent money laundering and terrorist financing. Other institutions that may contribute to the future crypto regulations in the UAE include SCA (Securities and Commodities Authority) and DFSA (Dubai Financial Services Authority).

The DMCC (Dubai Multi Commodities Centre) Free Zone is a place worth considering to use cryptocurrency in the UAE. The DMCC Crypto License will ensure the legality of your business. The first company to obtain this license was Regal Assets, which provides crypto cold storage services for clients.

The Core Advantages of Operating a Cryptocurrency Business are as follows:

100% foreign ownership availability for local companies - no need to find a local partner;

No restrictions on company income and capital transfers;

Favorable tax regime - 0% corporate income tax for the subsequent 50 years of operation;

0% import and re-export duty rates;

Zero currency restrictions;

No current restrictions on foreign employees' participation in company operations.

To obtain the license, the basic requirements are for the company applicant to have a share capital of 15,000 euros and a detailed business plan. Currently, there is no residency requirement for applying for this type of license. If the application process is successful, the license holder can freely conduct transactions. The codes used to identify the operations are:

7229-99 Distributed Ledger Technology Services - Supporting the development and application of database management solutions and providing any ancillary services using distributed ledger technology, including Block Chain. However, it should be noted that license holders are not allowed to exchange or trade in cryptocurrencies, fiat currencies, and commodities, nor are they allowed to provide any financial services, payment processing, or even brokerage business.

6599-92 Proprietary Trading of Crypto Commodities - License holders can perform sales and purchase operations on crypto commodities (proprietary trading) created based on distributed ledger technology. This activity also does not include any brokerage or exchange functions, banking, financial, payment processing, and similar regulated services.

This license is obtained for a local company, for which the following documents are required:

ID;

Confirmation of the registered address;

Verification document for the future company name;

Detailed business plan.

The full license process service includes:

Company formation costs and fees;

Payment of the crypto license application submission fee;

Opening a company account at an EMI (outside the UAE).

If we discuss the timeline for establishing a new crypto company in the UAE, this could take approximately 4 weeks.

To date, the UAE still does not have a cryptocurrency law. The "Regulation of Crypto Asset Activities in ADGM" by FSRA is the most detailed cryptocurrency guideline in the country. According to this standard, companies operating with crypto assets must meet the following requirements:

Only certain crypto assets are allowed. The decision on specific crypto assets is based on total market capitalization, traceability, security, price volatility, and other factors.

Certain crypto assets are allowed, the decision on specific crypto assets is based on total market capitalization, security, price volatility, and other factors.

You must "hold capital resources equivalent to 6 months of operating expenses" (equivalent to 12 months of crypto exchange) in fiat.

Prevent fraudulent activities. KYC is required.

Risk management and disclosure are mandatory.

Protect the security of funds and information through code version control, update implementation, issue resolution, and regular internal and third-party testing.

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