The Capital Market Authority launches an integrated framework to regulate virtual assets

The Capital Market Authority announced the issuance of a framework for regulating virtual assets, reflecting its commitment to developing a modern and integrated system that keeps pace with the rapid growth of the virtual assets sector, enhances market efficiency, and supports responsible innovation within a clear and effective regulatory environment.

This framework is a specialized regulatory umbrella that governs virtual asset activities, and consists of five main units: general requirements, regulating business conduct, alternative trading system, combating money laundering and terrorist financing, and precautionary requirements. Together, these units provide a comprehensive and transparent legislative and supervisory structure for entities working in this sector.

The framework also expands the scope of regulated activities from three to eight activities, which are: dealing in virtual assets as a principal, dealing in virtual assets as an agent, providing custody services, arranging custody services, arranging investment deals, providing investment advice, managing portfolios, and operating a multilateral trading facility. This expansion reflects the development of the market and the increase in business models and services associated with virtual assets. It also enhances the framework’s ability to accommodate a wider range of activities within clear rules and supervisory requirements that are appropriate to the nature of each activity.

The framework includes among its basic modules a specialized module for the alternative trading system, which regulates trading facilities. The scope of this unit is not limited to regulating trading facilities dedicated to virtual assets, but extends to include traditional multilateral trading facilities for securities, as well as multilateral trading facilities dedicated to tokenized securities. This reflects the Authority’s approach to building an integrated regulatory framework that keeps pace with the development of market structures and responds to the convergence of traditional and digital models within a more integrated trading environment.

The framework aims to establish balanced regulatory foundations that combine supporting innovation, enhancing market integrity, and protecting investors, by setting clear requirements for licensing, compliance, governance, risk management, and prudential standards, in line with international standards and relevant best practices, including those issued by the International Organization of Securities Commissions (IOSCO)IOSCO(FATF)FATF), and in accordance with the principle of “matching regulatory requirements with the nature of the activity and the level of risks.”

Commenting on this, CEO of the Capital Market Authority, Waleed Saeed Al Awadhi, said: “Virtual assets are witnessing a transformation in how financial markets operate, which requires the development of regulatory frameworks at the same pace. This framework establishes clear and comprehensive foundations for regulating virtual asset activities in the UAE, allowing innovation to grow within a reliable environment that ensures investor protection and enhances the integrity of markets.”

The issuance of this framework represents a qualitative step in developing the legislative and regulatory environment for the financial sector, confirming the Authority’s commitment to keeping pace with global technological and financial developments. It also provides a more advanced and flexible system for virtual assets and associated markets, and supports the growth of this sector on solid institutional foundations. Moreover, the framework enables entities to work within a regulatory environment that keeps pace with global trends and is based on transparency, efficiency and effective oversight, thus enhancing the country’s competitiveness and consolidating its position as a leading financial center for future business and financial services.