Dubai is gearing up to bring order to the “Wild West” of crypto with a security-first approach. The United Arab Emirates’ most populous city has long been a safe haven for digital asset investors, but exploits in the crypto space have pushed its decision-makers to revise the rules of the game. Dubai’s Virtual Assets Regulatory Authority (VARA) is set to introduce new regulations aimed at enhancing transparency and protecting consumers in the crypto sector to curb abuse and ensure market stability. The new rules will require virtual asset issuers and service providers to disclose the identities of crypto whales, i.e., major token holders. This move is part of Dubai’s broader strategy to position itself as a global hub for finance and technology by 2030. In the interview for The Standard , Matthew White, CEO of VARA, explained that the disclosure of crypto whales’ identities will help investors better understand the ownership structures of tokens and decrease the risk of market manipulation – especially when the majority of assets are owned by their creator. The regulations will also force issuers and service providers to perform reserve audits and define redemption mechanisms to offer investors clear information about risks. The disclosure requirements are not easy to enforce, though. Crypto transactions are pseudonymous and activities are linked to wallet addresses rather than real names. However, White believes that achieving transparency is feasible since virtual assets are recorded on blockchain – a decentralized and immutable ledger. The proposed regulations are slated for implementation in the first quarter of the year, with several already in progress. Dubai’s proactive regulatory approach, combined with its business-friendly environment and reputation as a safe, “family-oriented city,” has positioned it as an attractive destination for crypto businesses. Since its establishment in March 2022, VARA has granted 24 licenses to service providers and 10 in-principle approvals, with 350 applicants in the pipeline. Measures undertaken by VARA have, unsurprisingly, sparked controversy. Some industry leaders see them as a step toward legitimacy. Others, however, worry that mandatory disclosure could deter large-scale investors and compromise privacy – a core principle of the crypto space. Balancing transparency with privacy should be a key consideration for Dubai. Ultimately, though, the former may prevail given the global push for stricter crypto regulations.
