UAE Crypto Regulations


The United Arab Emirates is a federation of seven emirates along the eastern coastlines of the Arab Peninsula. It is a major regional hub of trade, with leading investments into new technology and is seeking to become a leading player in the blockchain space. There are comprehensive regulations in the UAE governing crypto asset activities.

It would be pertinent to mention here that crypto-related activities, both from the region’s public authorities and crypto businesses willing to set up establishments in the area, are in full swing.

For instance, the Dubai Financial Services Authority has already announced rules for investment tokens for firms intending to issue or trade investment tokens at the Dubai International Finance Center. The purview of these rules also includes accredited firms that aim to offer investment token-related financial services.

Another notable instance to cite here would be the Central Bank of UAE’s July 2021 decision to launch its first digital currency by 2026. This announcement comes as part of the bank’s 2023-2026 strategy that aims at placing the bank among the world’s top 10 central banks.

UAE’s Blockchain Strategy 2021

The United Arab Emirates launched a comprehensive Blockchain Strategy in 2021. The strategy declared conducting 50% government transactions through blockchain, starting from that very year.

UAE Regulatory Landscape

There are several financial regulators in the UAE covering mainland UAE and its free zones:

The UAE has the financial and capital markets regulated federally by the UAE Central Bank and the Securities and Commodities Authority (SCA). The Dubai Multi Commodities Centre (DMCC) falls under their supervision.

In addition, there are two free zones that have their own regulators:

– the Dubai International Financial Centre (DIFC), regulated by the Dubai Financial Services Authority (DFSA), and

– the Abu Dhabi Global Market (ADGM), regulated by the Financial Services Regulatory Authority (FSRA). 

The DMCC has allowed proprietary trading in crypto commodities as a licensable regulated activity going back to 2017. The DMCC sees crypto assets as commodities and has allowed them within its legal jurisprudence.

Officially, the ADMG has been the entity that has issued extensive regulations in 2018.

FSRA’s first crypto guidance was issued in 2017 as the Regulation of Initial Coin/Token Offerings and Virtual Currencies under the Financial Services and Markets Regulations. In 2018 they issued the Crypto Asset Legislative Framework.

After which FSRA published the crypto regulatory guidelines Regulation of Crypto Asset Activities in ADGM with the latest update made on 24th February 2020. These guidelines include security measures of crypto assets exchanges, AML/CFT requirements and more.

The regulatory landscape of crypto assets in the UAE started to rocket with the issuance of Stored Value Facilities (SVF) taking into account crypto assets by the UAE Central Bank. This was shortly followed by the SCA Virtual Asset Regulation in November 2020 which regulates the offering, issuing, listing and trading of crypto assets in mainland UAE.

At the end of 2021 the DFSA has introduced a regulatory framework for Investment Tokens, closing the circle of introducing crypto asset regulations in the jurisdiction.

SCA’s Virtual Asset Regulation

The Securities and Commodities Authority (SCA) issued guidelines titled Crypto Assets Activities Regulation (CARR) that set out general operational rules for crypto-asset businesses and individuals undertaking these activities to adhere to.

Additionally, it sets out additional AML/CFT provisions. These provisions include the need for having a solid compliance network, including the KYC and AML monitoring provisions. It requires deposits and withdrawals to be made only from and to a designated bank account that is in the name of the client. Moreover, the account should be with an authorized financial institution. The institution could be in the UAE or a foreign financial institution. If it is with a foreign financial institution, the institution must have explicit approval from the SCA. The regulation also looks into the traceability of an asset. If a crypto asset is not adequately traceable, it may not qualify for funding accounts or making transactions through a licensed person. 

The FSRA Crypto Regulations

The ADGM is governed by the Financial Services and Markets Regulations (FSMR) and Regulations set out by the Financial Services Regulatory Authority (FSRA), thus it is required to abide by requirements for carrying out the regulated activities while promoting transparency and technology governance, ensuring adherence to anti-money laundering and financial terrorism-related compliances.

The Financial Services Regulatory Authority (FSRA) serves as the financial regulator of the Abu Dhabi Global Markets (ADGM). The ADGM is a free zone in Abu Dhabi and by regulating it in the context of crypto assets and blockchain tech, the FSRA became the first regulator in the UAE to issue comprehensive guidance and regulations relating to cryptocurrency activities. The FSRA has also issued supplementary guidance for regulating the ICOs and virtual assets.

While we will come to the details of FSRA’s guidelines later, it would be vital to highlight the FSRA’s nature of engagement, when it comes to regulating crypto assets. The FSRA would aim to ascertain, on a case-by-case basis, whether a proposed coin or token counts as a security or commodity.

The FSRA dictates whether an ICO is to be regulated under the Financial Services Market Regulations on a case-by-case basis, on the premises of the characteristics the token exhibits. This is because issued ICOs can be financial or non-financial in nature. Non-financial tokens will not fall under the FSMRs, whereas those which have characteristics of Securities, will. Commodities still fall under regulations.

If we delve deeper, we will see that the FSRA’s decision to consider a token to be a security triggers prospectus obligations under section 61 of the FSMRs, and other obligations of the FSMRs as well as AML and KYC requirements.

Yet there are provisions for usual prospectus exemptions if an offer is made to a professional client (as categorized in the FSMR), or fewer than 50 persons in any 12 months. The exemption also applies where the consideration to be paid by a single person to acquire tokens is at least US$100,000.

According to the FSRA’s newest digital security guidance – Regulation of Digital Security Offerings and Virtual Assets under the Financial Services and Markets Regulations – from February 2020, the FSRA suggests that it prefers digital security issuers to consider both the primary and secondary market contexts. There are implications of this preference. It is incumbent upon the issuer to seek the digital securities’ admission to trading on multilateral trading facilities and recognized investment exchanges coming under the ADGM jurisdiction.

If FSRA declares virtual assets as digital securities, new requirements pop in. The facilities required would include intermediaries such as operators, crypto-asset exchanges, and more. These facilities would then have to acquire approval as financial services permission holders, recognized investment exchanges, and clearinghouses. It is vital to keep in mind here that the FSRA does not allow a secondary market to list digital securities issued outside the purview of the ADGM.

The FSRA might also consider the use of tokens by firms as components to build an investment fund on the blockchain as units in a collective investment fund. The ADGM fund rules would apply to such investment funds. It would also mean extensive regulatory requirements coming into action.

If an entity wishes to issue a stablecoin, it can only do so by staying under the purview of the ADGM. It should be a one-to-one arrangement with the backing of a fiat currency. The issuer of such stablecoins would qualify as a money services business and mandatorily hold financial services permission for the regulated activity of providing money services as per schedule 1, section 52 of the FSMR.

The DMCC Crypto Regulations

Over time, the Dubai Multi Commodities Center (DMCC) expanded its scope to become more accommodative to crypto asset businesses. In 2021 the DMCC, by entering a MoU with the SCA has established a regulatory framework for businesses offering, issuing, listing, and trading crypto assets in DMCC. As a trade-off, the DMCC had aligned with the requirements laid out in the SCA Virtual Asset Regulation Framework.

Businesses that are dealing with crypto assets thus gain access to licences for crypto-commodities trading.

Businesses that have DMCC trading licences can only trade on their behalf, using their funds for trading. The license does not come with the provisions for establishing exchange houses or conducting ICOs. This license, issued by the DMCC to a company, also allows qualifying companies to become one of the world’s first few cryptocurrencies deep storage vaults.

The DFSA Crypto Regulations

At the end of 2021 DFSA announced they have adopted their own regulatory framework for Investment Tokens based on the Consultation Paper 138 issued in March 2021.

The DFSA considers an Investment Token either a Security or a Derivative Token and the newly formed framework welcomes both individuals and Authorised Firms wishing to partake in the market.

With this first phase of adopting a Digital Assets regime representing a step forward for the implication of the DIFC in the crypto asset market, the regulating body is considering further adoption of tokens not covered yet, such as exchange tokens, utility tokens and stablecoins.

The UAE’s Crypto Anti-Money Laundering Guidelines

Anti-money laundering provisions in the country play a crucial role whenever it comes to the shaping of a robust crypto assets paradigm. In the United Arab Emirates, the legislation that deals with the AML efforts is Federal Decree-law No. 20 of 2018. Apart from anti-money laundering, the law also deals with combating terrorism financing and illegal organizations.

The AML law, along with the Cabinet Resolution No. 10 of 2019 – concerning the executive regulation of Federal Law no. 20 of 2018 – applies to all emirates. It also applies to the DIFC and ADGM.

The AML law that we are talking about here comes after the complete overhaul of the UAE’s earlier regime on AML and CFT. It is reasonable to assume – therefore – that it considers several newer aspects and makes the legislation foolproof. It attempts to appropriately define the contours of the AML/CFT laws and lists out the penalties for these activities. Moreover, there is Law No. 7 of 2014, which focuses on combating techniques against terrorism crimes.

The UAE’s AML Definition of the Money Laundering Offense and Perpetrators

The UAE’s AML laws extensively define what constitutes a money laundering crime. The law considers a person perpetrator of money laundering if he/she;

  • Conducts transactions to hide the funds’ illegal source.
  • Conceals the true nature, origin, location, way of disposition, or ownership of rights under the proceeds of a transaction.
  • Acquires, possesses or uses the proceeds upon receipt; or
  • Assists the perpetrator to escape punishment.

The vital thing to note here is that one does not require to prove the illicit source of the funds to convict a person for money laundering. Simultaneously, it would not constitute an offense of money laundering if the accused was not fully aware that the funds were derived from a felony or misdemeanor. The AML/CFT paradigm of the UAE takes into account any assets whatsoever. No distinctions exist when it comes to assets in digital form.

Sanctions for Money Laundering Under the UAE’s AML Regime

Sanctions for money laundering can be as severe as prison sentences of up to ten years. The monetary penalty can range anywhere between 100,000 Dirhams and 5 million Dirhams. It becomes all the more severe when committed by the representative of a legal entity (e.g. a member of the Board of Directors). In such cases, the monetary penalty may range anywhere between 500,000 and 50 million Dirhams. Additionally, all the funds considered to be tainted are forfeited. If forfeiture of funds is not possible, the authorities will seize an equivalent volume of funds through assets or some other way. Virtual currencies also come under the provisions of forfeiture.

What is vital to remember is that the legislation does not mention crypto assets. But they are assets in the broader sense of the term. They remain open for confiscation by the courts if they have been tainted in money laundering schemes. Offenses could also include the failure to report suspicious activities or to provide additional information upon request and deliberately concealing information and tipping off. One could also attract prison sentences or penalties if there is gross negligence that resulted in failing one’s reporting duties. Such failures or breaches may end up attracting penalties, including warnings, license revocations, fines, and even arrests.

The revamped UAE AML regulations also takes non-financial businesses under its purview. Additionally, it also includes professionals in the space and non-profit organizations. To understand whether one qualifies as a financial or non-financial institution, we should know what elementary characteristics separate one from the other.

What Constitutes a Financial Institution Under the UAE AML?

A financial institution is any entity that meets any of the following criteria on behalf of a customer:

  • Receives and deposits funds that are payable by the public.
  • Offers private banking services, credit facilities, cash brokerage services, currency exchange, and money transfer services.
  • Provides stored value services or facilitates electronic payments for retail and digital cash and virtual banking services.
  • Conducts financial transactions in securities, finance, and financial leasing.
  • Deals in means of payment, guarantees or obligations, or trades, invests, operates or manages funds, option or futures contracts, and exchange rates;
  • Participates in issuing securities and providing related financial services, conducting interest rate transactions, or managing fund portfolios and savings funds.
  • Prepares or markets financial activities, conducts insurance transactions, or any other activity, or financial transactions as determined by a supervisory authority.

What Constitutes Non-Financial Businesses and Professions Under the UAE AML?


Non-financial businesses and professions include brokerage services that conduct operations for the benefit of their customers in real estate deals, deals in precious metals or stones, or anything that amounts to over 55,000 Dirhams. It includes lawyers, notaries, accountants, and providers of corporate and trust services. It also includes non-profit organizations. A non-profit organization implies any formal group of a continuing set for a temporary or permanent time. It may also include natural or legal persons and not-for-profit legal arrangements aimed at collecting, receiving, or disbursing funds for charitable, religious, cultural, educational, social, and communal purposes.

Before going deeper into the functioning of the AML law and its applied qualities, it would be prudent to see the legal definitions as broad and non-exhaustive. For instance, the term digital cash is enough to indicate activities that render an entity a financial institution. The legal definition does not explain whether this digital cash considers all forms of crypto or only specific ones like stablecoins.

Authorities Responsible for Enforcing AML

There are several authorized entities approved by the law when it comes to the enforcement of the AML in the UAE.

The entities include the Central Bank of UAE, which operates the Financial Intelligence Unit. Duties of this unit include gathering information on suspicious activities from the filings made by the obliged entities. Other authorities include the DMCC within its free zone, the DFSA in the DIFC, and the FSRA in the ADGM.


Article 3 of the regulatory law makes the DIFC responsible for the implementation of the AML/CTF regulations. The DIFC also has the right to punish in case of any violations in the mainland UAE about the AML/CTF regime. Additionally, the DIFC also has its distinct set of AML/CFT regimes in Chapter II of Part IV of the DIFC regulatory law and AML/CFT module.

Overall, the AML rules have the provision for applying a risk-based approach to authorized firms. These firms keep the credit rating agencies out of their purview. Authorized firms would therefore mean the market institutions, non-financial businesses, professionals, and auditors.

Any crypto-asset business that wants to be issued with a license from the DFSA should compulsorily adhere to the DFSA’s AML module. Such a module would include provisions around due diligence and continuous monitoring.


ADGM also has its say over the AML/CFT regime applicable in the mainland UAE. The ADGM regulatory framework also went through an FSRA overhaul in 2018, 2019, and twice in 2020. It now applies to all FSRA-regulated authorities. The requirements of the ADGM are straightforward. It asks for detailed and comprehensive virtual asset compliance policies and the appointment of a money laundering reporting officer who would be responsible for overseeing the authorized person’s compliance with the AML rulebook.

How to List Cryptocurrencies in the UAE: Legalities Involved

If a licensed operator wishes to list a crypto asset on its exchange, the operator must comply with the regulations and decisions of the authority. Apart from compliance requirements about the listing of securities and commodities, the operator must also comply with the additional or varying requirements as laid out in the SCA’s framework. Some of the requirements vary as per the type of investors the exchange caters to. For instance, if it is open for retail investors, the set of requirements might differ from what would be required when working only with professional investors.

To be more precise, when it comes to professional investors, filing limited offer documentation listed in Section 9 of the SCA Virtual Asset Regulations is enough. But if it is for exchanges that work with retail investors, one would need additional approval for each crypto asset separately.

Crypto Asset Exchanges for Retail Customers: Requirements

Under the UAE crypto regulations, a crypto asset exchange targeting retail customers get permission to trade only for two types of users;

  • Ones who can ably demonstrate experience and the required know-how of how to trade cryptocurrencies or traditional securities and commodities; and
  • Ones who intend to acquire a crypto asset to exercise its utility exclusively, without investing intentions.

What do such specifications possibly imply? It implies that a crypto-asset exchange is responsible for implementing a knowledge test to ascertain that an onboarded user only wishes to acquire a crypto asset for its utility and nothing else. 

The Requirements to Earn a Crypto Asset Exchange Licence in the UAE

Earning a crypto-asset exchange license would require the operator to fulfill international best market practices. These best market practices include having the provisions for resilient technological systems. The operator must also have robust mechanisms in place for asset segregation and fulfilling capital requirements. The operator must instate solid surveillance mechanisms and stringent AML/CFT protocols. It should have formal screening procedures that would help it check customers’ knowledge and investment skills.

At the same time, it must have provisions that effectively dissuade participants from insider trading and market abuse. The requirements are primarily for centralized exchanges that are custodial of their users’ funds.

How to Set Up a Crypto Asset Exchange in the UAE?

Any entity that wants to operate a crypto asset exchange in and from UAE has to earn the SCA license. The SCA virtual asset regulation framework has its definition for a crypto-asset exchange. The framework defines an exchange as an entity that facilitates trading, the conversion, and the exchange of crypto assets in return for other crypto assets or fiat currency, security, or commodities. The facility should have provisions for non-discretionary trading or adhere to the order matching rules. It might also have, a system where potential buyers and sellers come together irrespective of whether the resulting transaction eventually happens on the platform or not. The SCA’s market regulations dictate the shape, contours, and nature of the licensing and operation of the exchange. But there could be departures from the accepted norms, where the SCA takes decisions on a case-by-case basis.

Legalities On Banking and Money Transmission

The official regulator for banking, credit, and monetary issues in the UAE is the Central Bank of UAE. The job of the Central Bank is to offer general regulations on banking, the overview of currency issuance, and supervising banking and other licensed financial activities. The banking and money transmission laws also, therefore, have their impact upon the crypto market. The bank also plays a crucial role in determining the macroeconomic landscape of the region as it advises the government on financial issues, maintains foreign exchange reserves, and serves as a bank for the government and other banks.  

The banking law that is relevant in this case is Federal Law No. 14 of 2018. Known as the financial services law, dealing with the Central Bank and Organization of Financial Institutions and Activities. The law came into effect after the Federal Law No.10 of 1980, concerning the Central Bank, the monetary system of the region, and the organization of banking was overhauled.

The UAE Central Bank had a Stored Value Facilities Regulation issued in September 2020. The regulation applies to the UAE, excluding its free zones. The SVF regulation is particularly vital as it allows crypto assets to be used as a stored value when purchasing goods and services despite the UAE not acknowledging them as legal tender.

The UAE banking scenario is changing gradually. Earlier, the banks used to adopt somewhat arbitrary restrictions. It disrupted the process of remitting funds to or receiving funds from the exchanges or other ecosystem businesses. Banks used to leverage the KYC and AML norms to activate restrictions without prior notice. Banks also hesitated to open accounts for businesses that were into crypto assets. But, the situation is changing with time and the increasing dominance of crypto assets worldwide.

FATF Plenary Update on UAE

The United Arab Emirates takes its participation in the international financial landscape seriously and strives to strengthen its national framework for combating money laundering and terrorist financing.

Since the first National Risk Assessment (NRA), performed in 2018, and the Financial Action Task Force’s (FATF) evaluation in 2019, the country’s legislative framework has seen massive developments, starting with the passing of the Federal Decree-Law No. (20) Of 2018 on Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organizations. Most recently, the FATF revealed that the UAE has addressed more than half of the key recommended actions from the Mutual Evaluation Report (MER), adopted in 2020.

As of March 4th, 2022, the jurisdiction has been added to the FATF’s Grey List. This entails that ‘’the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to extra checks’’.

Nevertheless, the FATF applauds and recognizes, in the March 2022 Plenary report, the progress made by all evaluated countries in combating money laundering and terrorist financing, despite the challenges posed by COVID-19.