Dubai tightens regulations for cryptocurrency license applicants, putting Binance under pressure. Emirati regulators have demanded additional information about the ownership, management, and auditing of Binance and other businesses. The Dubai Virtual Assets Regulatory Authority (VARA) ensures compliance with the highest regulatory standards.
UAE Takes Action Against Unlicensed Exchanges
Since the bankruptcy of FTX, many countries have tightened their regulations on crypto businesses. The United Arab Emirates was no exception to this trend. Dubai’s Virtual Assets Regulatory Authority (VARA) has recently tightened its scrutiny of cryptocurrency businesses, requiring a regulatory license to operate in the country.
In this context, the VARA has asked Binance, as well as other international companies, to provide additional information about their ownership structure, management, and auditing process to receive this license.
The purpose of this review is to encourage the development of the digital asset industry, while ensuring non-intrusive oversight. In addition, VARA focuses its attention on companies operating without a license. According to multiple sources, the regulatory authority has targeted a large number of crypto platforms operating illegally in Dubai.
The Virtual Asset Regulatory Authority (VARA) registry identified only four companies that were licensed, namely Binance, Komainu, Hex Trust and Crypto.com. However, these companies do not yet have the capacity to provide locally regulated digital asset solutions in Dubai.
Although VARA aims to encourage the development of the digital asset industry, it also takes risk prevention seriously. However, this move has been met with impatience from Binance, which has taken longer than expected to meet the VARA requirements.
Binance under pressure from US and Emirati regulators
Binance has sought for several days to offer trading services to users in Dubai through its Binance FZE entity. But faced operational challenges that delayed its launch.
To be able to offer its services, Binance has worked to improve its license by focusing on a minimum viable operational product (MVP). This would allow it to offer its services to both institutions and investors before applying for a Full Market Product License (FMP).
Unfortunately, the Virtual Asset Regulatory Authority (VARA) in Dubai, which oversees licensing, will not be able to issue FMPs until the end of June, further hampering Binance’s plans.
In addition, for about two weeks, Binance and its founder CZ have been facing a lawsuit from the United States Commodity Futures Trading Commission (CFTC). The CFTC blames the exchange for violating derivatives regulations, as well as maintaining bogus compliance procedures. This new pressure adds to the operational and regulatory challenges that Binance already faces, making the situation more complex for the Changpeng Zhao platform.
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