Web3 Going Abroad | A Brief Framework of Cryptocurrency Regulatory Policies in the UAE, Dubai, and Abu Dhabi

On June 30, 2025, the Monetary Authority of Singapore (MAS) will officially implement new regulations for Digital Token Service Providers (DTSP). This regulation, referred to in the industry as "cliff-like regulation," requires local businesses providing services such as cryptocurrency exchanges to operate under a license, meaning that a large number of unlicensed institutions may be driven out of Singapore. Meanwhile, Dubai and Abu Dhabi in the UAE have become one of the safe havens for "refugees from Singapore."

Thanks to a clear regulatory framework and innovation-supporting policies, the UAE is becoming the "Wall Street of cryptocurrency." Internationally renowned Web3 companies such as Binance, Crypto.com, OKX, Bybit, Kraken, and Ripple have already established a presence, with over 1,000 cryptocurrency-related companies in Dubai alone.

Figure 1: Numerous advantages of the UAE as a business and investment destination Source: AIYING

At the same time, due to the long-standing fixed exchange rate of the UAE Dirham against the US dollar (approximately 1 USD to 3.67 Dirhams), it has attracted a significant influx of international capital, especially from high-net-worth individuals in regions such as Russia and Iran. Data from Chainanalysis shows that from July 2023 to June 2024, the UAE received over $30 billion in cryptocurrency inflows, making it the third-largest cryptocurrency economy in the Middle East and North Africa (MENA) region (after Turkey and Morocco). Furthermore, the UAE has the highest cryptocurrency ownership rate globally. According to Triple A, the cryptocurrency ownership rate in the UAE exceeded 25% in 2024, while the global average ownership rate is only 6.9%.

Figure 2: UAE's cryptocurrency ownership rate ranks first in the world

Speaking of the UAE, due to its unique national organizational structure, the regulatory system is relatively complex. In this issue of Global Policy, Starlabs Consulting will outline a clear framework to provide reference for Web3 entrepreneurs intending to venture into the UAE.

The UAE's Unique Federal System

The UAE consists of seven emirates: Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al-Quwain, Fujairah, and Ras Al Khaimah. Each emirate's royal family governs its own territory and enjoys independent autonomy.

Figure 3: Distribution of the various emirates of the UAE and their major cities

Among them, the capital Abu Dhabi and the commercial center Dubai account for 80% of the national GDP. These two emirates have also established several economic free zones. Abu Dhabi has the Abu Dhabi Global Market (ADGM), while Dubai has the Dubai International Financial Centre (DIFC), Dubai Multi Commodities Centre (DMCC), Dubai World Trade Centre (DWTC), and Dubai Airport Freezone Authority (RAKEZ). Additionally, Ras Al Khaimah has established the Ras Al Khaimah Digital Asset Oasis (RAKDAO).

As a result, the regulation of crypto assets in the UAE covers multiple jurisdictions, each with its own regulatory authority, and some free economic zones have specific regulatory frameworks, forming a unique mechanism of multi-layered regulation at the federal, emirate, and local levels.

Figure 4: UAE's Virtual Asset Regulatory System Source: AIYING

1. Regulatory Authorities

• Federal Level: The Central Bank of the UAE (CBUAE) regulates cryptocurrency payments; the Securities and Commodities Authority (SCA) regulates investment-related crypto assets and is the licensing authority.

• Dubai (excluding DIFC): The Virtual Assets Regulatory Authority (VARA) regulates and is the licensing authority.

  Dubai International Financial Centre (DIFC): The Dubai Financial Services Authority (DFSA) regulates, with independent crypto regulatory policies.

  Dubai Multi Commodities Centre (DMCC): Regulated by VARA but has independent licensing.

• Abu Dhabi Global Market (ADGM): Regulated by the Financial Services Regulatory Authority (FSRA), with independent crypto regulatory policies.

Figure 5: Types of licenses, regulatory scope, and jurisdiction of different regulatory authorities in the UAE Source: WeChat Official Account Taihui Research

2. Regulatory Basis

Currently, the UAE has five main regulatory frameworks to manage the provision of virtual asset services, including:

• Federal regulations on virtual assets issued according to Cabinet Resolution No. 111;

• Regulations issued within the two financial free zones of the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM);

• Regulations applicable within the emirate of Dubai (excluding DIFC), overseen by the newly established Dubai Virtual Assets Regulatory Authority (VARA);

• Licensing framework for crypto businesses in the Dubai Multi Commodities Centre (DMCC) free zone.

Figure 6: Comparison of VARA regulatory zone in Dubai, ADGM, and DIFC Source: AIYING

There are also some local regulations, such as those issued by the Dubai Department of Economic Development (DED) regarding regulations and licensing requirements for virtual asset-related activities in Dubai, and the Abu Dhabi Department of Economic Development (ADDED) regarding regulations and licensing requirements for virtual asset-related activities in Abu Dhabi.

Federal Level Regulatory Framework

1. SCA Regulates Crypto Assets by Referencing Securities

The Securities and Commodities Authority (SCA) is authorized to regulate crypto asset activities in mainland UAE and some free zones (excluding ADGM and DIFC).

In 2023, the SCA issued the "Regulatory Guidelines for Virtual Assets and Virtual Asset Service Providers," which standardizes the use of virtual assets (VAs) and the activities of service providers (VASPs). According to these guidelines, the SCA categorizes virtual assets into two types:

• Virtual assets for investment purposes, regulated by the SCA, but digital securities and non-investment NFTs are not within the SCA's regulatory scope;

• Virtual assets for payment purposes, regulated by the Central Bank of the UAE (CBUAE), unless specifically approved by the CBUAE for investment.

The SCA stipulates that the following activities involving virtual assets must obtain a license:

• Operating and managing virtual asset platforms

• Providing virtual asset exchange services

• Providing virtual asset transfer services

• Brokerage services for virtual asset trading

• Custody and management of virtual assets

• Financial services related to virtual asset issuance

The SCA provides specific licenses and related capital requirements for the following activities:

• Virtual asset platform operators: Only operating virtual asset platforms, with a paid-up capital of 1 million Dirhams; if providing other virtual asset services, a paid-up capital of 5 million Dirhams is required. Both must maintain 6 months of operational funds.

• Virtual asset custodians: Paid-up capital of 4 million Dirhams, required to maintain 6 months of operational funds.

• Virtual asset financial advisors: Paid-up capital of 500,000 Dirhams, required to maintain 6 months of operational funds.

• Virtual asset portfolio managers: Paid-up capital of 3 million Dirhams.

• Virtual asset brokers: Paid-up capital of 2 million Dirhams.

• Virtual asset dealers: Paid-up capital of 30 million Dirhams.

Additionally, virtual asset trading platforms are considered equivalent to multilateral trading facilities (MTFs) used in traditional financial markets, meaning they are subject to similar regulatory standards.

2. CBUAE Regulates Payment Tokens and Stablecoins by Referencing Payment Instruments

In June 2024, the Central Bank of the UAE (CBUAE) issued the "Payment Token Services Regulations" (PTSR), regulating stablecoins as payment instruments, and only accepting stablecoins pegged to the Dirham. This means that other stablecoins pegged to foreign currencies (such as USDT, USDC) are not recognized in the payment sector.

These regulations apply throughout the UAE, including various free trade zones, but exclude DIFC and ADGM. The regulations cover major activities related to the issuance, conversion, custody, and transfer of payment tokens, collectively referred to as "payment token services."

According to these regulations, any individual or entity providing payment token services within the UAE, or offering such services to individuals within the UAE, must obtain a license from the CBUAE (Dirham payment token services) or register (foreign payment token services). Licenses are only issued to companies registered in the UAE (excluding companies in financial free zones), while entities not registered in the UAE but located in the UAE (including DIFC and ADGM) can apply for registration as foreign payment token issuers.

The regulations impose strict licensing and compliance requirements on stablecoin issuers, including capital requirements, transparency regulations, and obligations related to anti-money laundering (AML) and counter-terrorism financing (CFT). The capital requirements are as follows:

• Payment token issuers: Initial and ongoing capital of 15 million Dirhams; additional ongoing capital amounting to at least 0.5% of the face value of outstanding payment tokens in legal tender. Issuers must ensure that assets are fully collateralized and undergo regular third-party audits.

• Payment token custodians, transfer agents, and payment token conversion service providers: Regulatory requirements of 3 million Dirhams and 1.5 million Dirhams, respectively, based on their average monthly payment token transfer value being greater/less than 10 million Dirhams.

Progress on Dirham-Pegged Stablecoins:

In August 2023, Tether, the issuer of USDT, announced a partnership with Abu Dhabi-listed Phoenix Group (PHX) to launch a Dirham-pegged stablecoin.

In October 2024, the CBUAE approved the Dirham-backed stablecoin AE Coin launched by local company AED Stablecoin LLC.

In May 2025, Abu Dhabi's sovereign wealth fund ADQ, First Abu Dhabi Bank (FAB), and the second-largest international holding company in the Gulf region, IHC, announced their collaboration to launch a Dirham-pegged stablecoin, awaiting CBUAE approval.

✨ Starlabs Consulting Note: According to Chainalysis data, 93% of stablecoin transfer volumes in the UAE are retail-level.

3. Tax Incentives: VAT Exemption

Individual Investors: 0 capital gains tax and 0 income tax on cryptocurrency investments.

Corporate Tax: Starting in 2023, the UAE introduced a 9% corporate income tax (with exemptions for businesses with taxable income below 375,000 Dirhams), which also applies to cryptocurrency-related businesses.

VAT Exemption: Starting November 15, 2024, cryptocurrency transactions (including exchanges and transfers of ownership) will enjoy VAT exemption, retroactive to January 1, 2018.

Dubai Regulatory Framework: VARA + DIFC

1. Dubai International Financial Centre (DIFC): Regulated by the Dubai Financial Services Authority (DFSA)

DIFC is an economic free zone in the UAE with an independent tax policy and regulatory framework.

The DIFC "Digital Assets Law," enacted in March 2024, recognizes digital assets as property under the principles of English common law. The DFSA is responsible for regulating crypto activities within the DIFC, and cryptocurrency-related entities operating in the DIFC must obtain a DFSA license. Starlabs Consulting has learned that Standard Chartered Bank, Ripple, and others have successfully obtained DFSA licenses.

In March 2025, the DFSA launched a regulatory sandbox for companies providing tokenized investment products and services, including tokenized stocks, bonds, Islamic bonds, and collective investment fund units.

The regulation in DIFC is implemented through two key policies:

i. Investment Token Regime

In October 2021, the DFSA published the "Investment Token Regime," providing an initial regulatory framework for investment tokens (such as security tokens or derivative tokens). This framework applies to institutions involved in marketing, issuing, trading, or holding investment tokens within the DIFC, as well as authorized companies engaged in investment token activities, such as facilitating trades, using tokens for payments, and providing consulting.

ii. Crypto Token Regime

In November 2022, the DFSA released comprehensive legislation implementing the "Crypto Token Regime." This regime covers not only anti-money laundering (AML) and counter-terrorism financing (CFT) risks related to trading, clearing, holding, or transferring crypto tokens but also risks related to consumer protection, market integrity, custody, and the financial resources of service providers.

Under this regime, only accepted crypto assets (Accepted Crypto Tokens) can be regulated and used in circulation within the DIFC. Currently, the DFSA recognizes five tokens: BTC, ETH, LTC, TON, and XRP, as well as stablecoins USDC and EURC under Circle. Other types of crypto assets, such as utility tokens and NFTs, are explicitly excluded from the regulatory scope.

2. Outside DIFC: Regulated by the Virtual Assets Regulatory Authority (VARA)

Dubai's virtual asset regulatory framework is based on the "Virtual Assets Regulatory Law," which came into effect in March 2022. This law also established a dedicated regulatory authority—the Virtual Assets Regulatory Authority (VARA)—responsible for regulating virtual asset activities in various regions of Dubai, including free zones and special development zones (excluding DIFC), and establishing connections with the Dubai World Trade Centre Authority (DWTCA). Thus, Dubai has become the first and only jurisdiction in the world to establish a dedicated regulatory authority for virtual assets.

As an autonomous regulatory body, VARA collaborates with the SCA and CBUAE's virtual asset regulations to oversee virtual asset service providers (including exchanges, venture capital funds, NFT platforms, etc.) outside the DIFC, establishing an approval and licensing system for virtual asset businesses.

VARA and DFSA share some similarities but do not have overlapping jurisdictions. VARA has specified eight categories of regulated virtual asset (VA) activities, and any VASPs wishing to provide these services must apply for a license before operating:

• VA consulting services

• VA brokerage services

• VA custody services

• VA trading services

• VA lending services

• VA management and investment services

• VA transfer and settlement services

• VA issuance category 1 (primarily involving the issuance of stablecoins pegged to fiat currency)

According to VARA's public registry, 35 companies have obtained VASP licenses issued by VARA, including Binance, OKX, Crypto.com, Deribit, HashKey, and Gate.

In October 2024, VARA announced fines and cease-and-desist orders against seven unlicensed cryptocurrency entities, with fines ranging from $13,000 to $27,000.

In September 2024, VARA signed a cooperation framework with the UAE Securities and Commodities Authority (SCA) to clarify their respective regulatory scopes. Both parties agreed that VASPs planning to operate in Dubai only need to obtain VARA licensing to be automatically registered with the SCA, thus serving the broader UAE market.

Additionally, VARA requires that starting from September 26, 2024, all companies promoting digital asset investments must include clear risk warnings in their marketing communications.

The "Regulations on the Management of Virtual Asset Marketing and Related Activities," effective in October 2024, further strengthens regulation, covering marketing, consulting services, decentralized finance (DeFi), and custody services, while introducing a tiered penalty system to address improper marketing and exaggerated claims.

On May 19, 2025, VARA updated its regulatory rules to officially include RWA tokenization under its regulation, allowing it to be freely traded in the secondary market. In the same month, Dubai officially launched the first licensed real estate tokenization project in the MENA region.

Abu Dhabi Global Market (ADGM): Regulated by the Financial Services Regulatory Authority (FSRA)

ADGM is an international financial center established in Abu Dhabi. As an independent economic zone, ADGM has a flexible regulatory mechanism, adopting common law principles to provide a transparent and efficient regulatory environment.

FSRA is the independent regulatory authority responsible for ADGM. The licenses issued by FSRA cover activities such as cryptocurrency trading, storage, purchasing, selling, and asset management.

Figure 7: In November 2022, Binance obtained a financial services license (FSP) issued by FSRA.

In 2022, the FSRA issued "Guidance on the Regulation of Virtual Asset Activities," clarifying the normative requirements for virtual asset providers, including capital prerequisites, personnel control, anti-money laundering (AML), and customer due diligence (KYC) compliance measures.

In 2023, ADGM introduced a formal regulatory framework for decentralized autonomous organizations (DAOs) and other digital asset entities, allowing DAOs to operate legally and issue tokens to members.

In 2024, the FSRA published Consultation Paper No. 7 of 2024, proposing a regulatory framework for stablecoins based on fiat-referenced tokens (FRT) and planning to amend existing related rules to allow tokens to be applied in various scenarios such as payment services and investment services.

Starlabs Consulting notes that USDT has been listed as one of the accepted tokens by ADGM, and stablecoin companies such as Paxos and Circle have also received in-principle approvals (IPA) from FSRA. In March 2025, the Abu Dhabi-backed investment group MGX used stablecoins to invest $2 billion in Binance.

Additionally, ADGM has established a fintech sandbox, allowing companies to test their crypto-related products and services in a controlled environment.

Figure 8: Comparison of VARA and ADGM regulations Source: AIYING

Other Popular Free Zones

In addition to the strictly regulated licenses dominated by ADGM and VARA, some free zones have launched lower-threshold "non-regulated" virtual asset licenses, such as the Dubai Multi Commodities Centre (DMCC), Dubai World Trade Centre (DWTC), Dubai Airport Freezone Authority (RAKEZ), Dubai Silicon Oasis Authority (DSOA), Fujairah Free Zone Authority (IFZA), and Ras Al Khaimah Digital Asset Oasis (RAKDAO). Each area offers specific licensing options tailored to the needs of cryptocurrency businesses. While these licenses do not apply to exchange operations, they allow specific business activities to be conducted.

Figure 9: Types of business under non-regulated and regulated licenses Source: AIYING

Among them, DWTC has become a key hub for the UAE's crypto industry and collaborates with VARA to provide a regulatory framework. DWTC offers 100% foreign ownership, with no personal income tax or capital gains tax, and no currency restrictions, making it an ideal choice for cryptocurrency businesses. Binance has partnered with the Dubai government to promote the establishment of a regional cryptocurrency center at DWTC.