The main regulator of Dubai’s crypto market required cryptocurrency companies already operating in the region to provide a full report on their business processes, including detailed information on their management structure. Similar requirements apply to companies only planning to obtain a license to operate in the jurisdiction.
The Virtual Assets Regulatory Authority (VARA) required virtual asset service providers (VASPs) to file additional information about their structure, governance, and auditing processes. In particular, the cryptocurrency exchange Binance received such a notice. This is reported by Bloomberg, citing unnamed sources.
The primary reason for such tightening by the emirate’s government, first of all, is the negative impact of the FTX collapse. On the other hand, VARA’s actions are the result of the close attention to VASPs from the U.S. regulators.
For example, VARA representatives demanded that Binance submit detailed information about its board of directors and its business processes. However, Binance doesn’t have a global headquarters and is run by a global advisory board instead of a regular board. Furthermore, Binance has a complex corporate structure, with several holding companies, so such a request from the regulator would be quite problematic for the company to handle.
According to Changpeng Zhao, CEO of Binance, the company provided VARA with all the information that meets its “regulatory and fiduciary responsibilities” and is willing to provide information on the ownership structure of the local entity. However, disclosure of the global advisory board is out of the question.
Earlier, the U.S. Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance and its CEO for trading violations, triggering the FUD effect. And even though Changpeng Zhao denied all of the allegations, Binance’s market share dropped by 16%.
In total, almost all global VASPs applying for licenses in Dubai received similar notices from VARA. Those businesses that already have a license to operate in the jurisdiction will have to prove compliance with the new requirements by the end of June this year.
The UAE authorities are seeking to turn Dubai into the blockchain industry hub. Within the framework of these initiatives, a loyal environment for crypto businesses is being created, and VARA issued new rules to regulate the cryptocurrency market.
