Bitcoin, NFTs, crypto, and gaming tokens, we have all heard of these and have a basic idea of what they are, but how can these things be useful to a business and can you use them as a form of payment in the UAE?
Not to worry, the following article will clear up everything you need to know about these virtual assets and how, when and where you can use them.
Virtual assets are intangible assets that exist only in a digital or virtual form. These assets are created, stored, and traded electronically and can be used for payment or investment purposes. A great example of a virtual asset is Bitcoin, it is not physical money that you can hold or store at the bank, however you do have a digital wallet where your “money” is stored and you can make payments with it. For now it is still fairly limited as companies do not accept crypto payments however with the ever changing technological environment this method is becoming a possible method of payment in the UAE.
The reason why crypto currency and other virtual assets are not accepted as a method of payment by many is because the risks associated with virtual assets are fairly high and it is therefore crucial that they are thoroughly regulated. This is why VASPs (Virtual Asset Service Providers) are still relatively rare as the licensing process is tedious and meticulously done. With the recent publication of the Cabinet Decision 111 of 2022 it has outlined which activities regarding virtual assets require a license:
a. provision of Virtual Asset Platform operation and management services
b. provision of exchange services between one or more forms of virtual assets
c. provision of Virtual Asset transfer services
d. provision of brokerage services in trading operations in Virtual Assets
e. provision of Virtual Asset custody, management, and control services
Essentially all activities related to virtual assets require a license whether you are an individual or a company receiving or accepting payments with virtual assets. As of now the licensing and regulation in the UAE varies depending on the Emirate. The ADGM (Abu Dhabi Global Market) regulates its virtual assets market through FSRA (Financial Services Regulatory Services) and in Dubai the recently established VARA (Virtual Assets Regulatory Authority) is responsible for licensing and regulating this sector in the entire Dubai Emirate excluding DIFC (Dubai International Financial Center). The reason for this is because if you would like to obtain a virtual assets license for DIFC you need to do so through the DFSA (Dubai Financial Services Authority). VARA seeks to facilitate collaborative engagement between global Virtual Asset Service Providers (VASPs), industry thought leaders, and international regulatory authorities.
As mentioned earlier it is however a payment that is being accepted on a more regular basis and one can now use virtual assets within real estate as both Nakheel and Damac Properties announced in 2022 that they will accept certain forms of crypto currencies as payments. A company by the name of Bikeera which sells bicycles, gears, scooters and other services also announced towards the end of 2022 that its customers could use certain virtual assets as payment for their chosen product or service. This goes to show that slowly but surely virtual assets are taking any and all markets by storm and it could potentially be the future of all payments!
To find out more about virtual assets in Dubai specifically visit VARA and to find out more about virtual assets in Abu Dhabi visit ADGM and finally DIFC.
And if you still seek more information about crypto currency – I strongly recommend reading through this report published by PWC.
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