• The Virtual Assets and Regulatory Authority (VARA) in Dubai has released a new set of regulations for crypto-linked firms.
• These regulations include a ban on privacy-focused cryptocurrencies such as Monero (XMR) and Zcash (ZEC).
• Firms found to be in violation of the compliance framework may face hefty fines up to 50 million Dirhams ($13 million).
New Regulations by VARA
The Virtual Assets and Regulatory Authority (VARA) in Dubai has released a new set of regulations for crypto-linked firms attempting to set up business in its jurisdiction. This comes after a number of privacy coins have started to gain traction in the crypto industry, with many investors turning to them as a way to protect their funds from government regulations.
Ban on Privacy Coins
Among these new regulations is one that might not come off as a surprise: privacy. Dubai has implemented a policy that crypto firms must be able to demonstrate the origin of crypto funds and crypto assets present in their systems. Licensing must also be obtained only from the regulator, with no other recourse for any crypto firm but to comply with its regulatory framework. In order to do so, VARA has issued a total ban on privacy-focused cryptocurrency projects and assets such as Monero (XMR) and Zcash (ZEC). Other privacy-focused cryptocurrency projects such as DASH, Horizen (ZEN), and Beam may also be affected. It is unclear whether third-party dApps such as Tornado Cash will also be included in the ban.
Financial Stability Threatened
Anonymity-enhanced cryptocurrencies pose a threat to the country’s financial stability, according to VARA, thus any token or cryptocurrency operating from this notion must be banned to prevent miscellaneous miscalculations on the part of the regulator. As such, all crypto firms located within Dubai must adhere strictly with these rules or suffer heavy penalties imposed by the regulator if found violating any rule or regulation.
Heavy Penalties Imposed
Individuals and companies found guilty of violating VARA’s terms may face imposing fines up 20 million Dirhams ($5 million), while institutionally-tied projects could face even higher penalties running up 50 million Dirhams ($13 million).
Regulation Exclusion Outside Dubai
It is important to note that these rules only apply within Dubai – firms located outside its jurisdiction are excluded from this regulation but remain subject local laws regarding virtual assets related activities where they are based out of.