The UAE Securities and Commodities Authority (SCA) has announced that it will begin accepting licensing applications for virtual asset service providers (VASPs) operating in the country.

This move follows the issuance of resolution number 111 of 2022 by the UAE Cabinet, which regulates virtual assets and aims to create an attractive environment for global companies and institutions operating in the virtual asset sector.

The SCA has mandated that all VASPs must submit an application and obtain a license from the regulator, except for those already licensed in the country’s financial free zones.

However, digital asset companies operating within the emirate of Dubai must comply with its own financial regulator, the virtual asset services authority (VARA), and obtain a license from VARA.

The new resolution applies to all transactions related to virtual assets for investment purposes, including non-financial free zones in the country. The SCA has explained that the aim is to ensure the protection of investors’ funds in virtual assets from illegal practices.

It also specified that its provisions do not apply to virtual assets used for payment purposes as these are subject to the jurisdiction of the Central Bank, nor do they apply to financial free zones.

UAE-based blockchain lawyer Irina Heaver has emphasized the importance of complying with the new law. Failure to do so may result in financial fines of up to 10 million AED ($2.7 million), disgorgement of profits, and criminal investigation by the public prosecutor.