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Report on Retail Cryptocurrency Trading Status in the United Arab Emirates

Date: 2025-06-26

Topic: Retail_Trading_Status

Description: Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).

Retail_Trading_Status

Identified Status: Allowed-Regulated

Detailed Narrative Explanation:

Individual citizens and residents in the United Arab Emirates (UAE) are legally permitted to buy, sell, and hold cryptocurrencies. This activity is subject to a comprehensive and evolving regulatory framework overseen by multiple authorities at both the federal and emirate/free zone levels. The UAE has positioned itself as a crypto-friendly jurisdiction, actively working to foster innovation in the virtual asset space while ensuring robust investor protection and compliance with international anti-money laundering (AML) and counter-terrorism financing (CTF) standards.

Key Regulatory Bodies and Frameworks:

The UAE's regulatory landscape for cryptocurrencies is multifaceted, with several key bodies involved:

1. Securities and Commodities Authority (SCA): At the federal level, the SCA is a primary regulator for crypto assets. SCA Decision No. (23/R.M) of 2020 established a framework for offering, issuing, listing, and trading digital assets, mandating that businesses dealing in cryptocurrencies obtain an SCA license. Cabinet Resolution No. (111) of 2022 further reinforced this by requiring all crypto-related activities to be regulated and to comply with licensing conditions. The SCA's regulations cover a wide range of crypto assets, whether classified as securities or not, particularly if they are listed on organized markets. The SCA also treats some cryptocurrencies like securities, subjecting them to relevant securities laws. In September 2024, the SCA and Dubai's Virtual Assets Regulatory Authority (VARA) signed a cooperation agreement to enhance the regulatory framework, clarifying their roles and improving the operational landscape for Virtual Asset Service Providers (VASPs). VASPs operating in mainland UAE (outside of specific free zones) generally require an SCA license.

2. Virtual Assets Regulatory Authority (VARA): Established in Dubai in March 2022 by Law No. 4, VARA is responsible for regulating, supervising, and overseeing virtual asset activities within the Emirate of Dubai (excluding the Dubai International Financial Centre - DIFC). VARA issued its Virtual Assets and Related Activities Regulations in February 2023, covering various licensed virtual asset activities such as advisory, broker-dealer, custody, exchange, and lending services. All VASPs operating in Dubai under VARA's jurisdiction must be licensed by VARA and comply with its rulebooks, including those for company operations, compliance and risk management, technology and information, and market conduct. VARA has also issued specific regulations for marketing virtual assets.

3. Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM): The FSRA has established a comprehensive regulatory framework for spot crypto asset activities within the ADGM, a financial free zone in Abu Dhabi. This framework addresses risks such as AML/CTF, consumer protection, technology governance, and safe custody. The FSRA requires firms dealing with "Accepted Crypto Assets" (those meeting FSRA criteria) to obtain a Financial Services Permission (FSP). The FSRA has been actively regulating crypto assets since 2018 and continues to update its framework, including recent guidance on Fiat-Referenced Tokens (FRTs), commonly known as stablecoins.

4. Dubai Financial Services Authority (DFSA) of the Dubai International Financial Centre (DIFC): The DFSA regulates virtual assets within the DIFC, another financial free zone. It launched its Crypto Token Regime, which came into force in November 2022, and has since made amendments to enhance requirements for token admission, custody, client asset protection, and AML/CTF measures. The DIFC enacted the Digital Assets Law (DIFC Law No. 2 of 2024) to further solidify its regulatory stance.

5. Central Bank of the UAE (CBUAE): The CBUAE plays a role in regulating payment tokens and stablecoins, particularly those pegged to the UAE Dirham (AED). In June 2024, the CBUAE Board of Directors approved a system for licensing and overseeing stablecoins. Regulations stipulate that AED-backed payment tokens must be backed by AED and cannot be linked to other currencies or virtual assets. There has been some discussion and clarification regarding the interaction of CBUAE regulations with those of VARA, particularly concerning stablecoins not pegged to the AED. The CBUAE is also progressing with its Digital Dirham initiative, a central bank digital currency (CBDC), planned for a retail launch in late 2025.

AML/KYC Requirements:

A significant focus of UAE's crypto regulations is on AML/CTF compliance. VASPs are required to implement robust AML/KYC frameworks, including customer due diligence (CDD), ongoing transaction monitoring, suspicious activity reporting (SAR) to the UAE Financial Intelligence Unit (FIU), record-keeping, and sanctions screening. These requirements align with the Financial Action Task Force (FATF) standards, including the "Travel Rule" for virtual asset transactions. Failure to comply can lead to significant penalties, including fines and license revocation.

Personal Trading vs. Business Operations:

While personal crypto trading by individuals for their own accounts is generally permitted and does not require licensing, any commercial activity, such as operating a trading platform, providing exchange services, or offering financial services involving virtual assets, requires a license from the relevant regulatory authority.

Investor Protection and Market Integrity:

The regulatory frameworks aim to protect investors, ensure market integrity, and foster innovation. Regulators issue warnings about the risks associated with crypto investments and take action against unlicensed or fraudulent operations. The issuance of anonymity-enhanced cryptocurrencies is generally prohibited.

Taxation:

The UAE generally does not impose personal income tax, which extends to capital gains from cryptocurrency trading for individuals. However, businesses engaged in crypto-related activities may be subject to corporate tax.

Recent Developments and Outlook:

The UAE continues to refine its crypto regulatory landscape. Recent updates include new marketing regulations from VARA, amendments to the DFSA's Crypto Token Framework, and the SCA's new regulations for Virtual Asset Platform Operators. The CBUAE's approval of a stablecoin licensing system and the ongoing development of the Digital Dirham signal further integration of digital assets into the UAE's financial system. Surveys indicate a strong interest among UAE retail investors to increase their crypto holdings, reflecting growing adoption.

Specific Text Excerpts and Sources:

• Legality and Regulation: "Yes, crypto trading, such as Bitcoin, Pi coin, and Ethereum, is legal in Dubai. The UAE Securities and Commodities Authority (SCA) and the Dubai Financial Services Authority (DFSA) regulate and control the UAE crypto regulation." - KYC Hub
• Personal Trading: "A landmark decision by the Dubai Court of Cassation in November 2024 established that personal crypto trading—where individuals buy and sell cryptocurrencies for their own accounts—does not require licensing. However, commercial activities such as operating a trading platform or providing financial services involving virtual assets must be regulated." - Horizons & Co
• VARA's Role: "The Virtual Assets Regulatory Authority (VARA) is responsible for regulating and overseeing the provision, use, and exchange of virtual assets in and from the emirate of Dubai." - VARA Website
• SCA Licensing: "Since the issuance of Federal Cabinet Decision No 111 of 2022 on the regulation of virtual assets and their service providers, no person has been permitted to engage in virtual asset activities in Onshore UAE without first obtaining approval and a licence from the SCA or a local licensing authority." - Charles Russell Speechlys
• AML/CFT Focus: "Under UAE law, any use of digital assets to conceal illicit financial activities is strictly prohibited. This includes using cryptocurrency to transfer funds derived from criminal activities, converting illegal proceeds into digital assets to obscure their origins, and utilising decentralised finance (DeFi) platforms or privacy coins to bypass regulatory oversight." - Horizons & Co
• ADGM Framework: "The Regulation sets out and limits the FSRA's approach to the regulation of crypto asset activities in and from the ADGM, including activities conducted by crypto asset exchanges, crypto asset custodians and intermediaries engaged in crypto asset activities." - Al Tamimi & Company
• CBUAE on Stablecoins: "The Central Bank of the UAE (CBUAE) Board of Directors has approved a comprehensive system for licensing and overseeing stable cryptocurrencies." - CBUAE Press Release (via various reports)
• Taxation: "The UAE does not tax individual income, including capital gains from crypto. You can legally withdraw crypto and use it for purchases without worrying about local taxes." - 1tab exchange "Notably, the UAE does not impose personal income tax, meaning individuals trading or holding cryptocurrencies are not subject to income tax on their crypto activities." - Hacken.io

Direct URL Links to Sources:

• https://kychub.com/crypto-uae-2025/
• https://horizonslaw.com/insights/trading-with-cryptocurrency-and-criminal-liability-for-individuals-in-the-uae/
• https://arabassetconsulting.com/cryptocurrency-regulations-in-the-uae/
• https://www.pinsentmasons.com/out-law/news/dubais-vara-issues-new-crypto-marketing-regulations-and-guidance
• https://1tab.com/en/blog/how-to-cash-out-crypto-in-dubai-the-uae
• https://www.mayerbrown.com/en/perspectives-events/insights/2023/03/varas-new-regulations-for-virtual-assets-in-dubai
• https://www.fincrimecompliance.com/aml-regulations-for-virtual-assets-service-providers-in-uae/
• https://sumsub.com/blog/crypto-regulations-uae/
• https://www.vara.ae/
• https://globalmediainsight.com/blog/cryptocurrency-in-dubai/
• https://www.tamimi.com/law-update-articles/regulation-of-crypto-assets-at-adgm/
• https://nhmanagement.com/blog/understanding-the-uae-sca-draft-regulations-on-security-and-commodity-tokens/
• https://www.adgm.com/media/announcements/adgm-proposes-a-regulatory-framework-for-spot-crypto-asset-markets
• https://hacken.io/insights/uae-crypto-regulation-adgm-vara-compliance-explained/
• https://www.dlapiper.com/en/insights/publications/2022/09/the-fsra-publishes-its-principles-for-virtual-asset-regulation-and-supervision
• https://www.chambersandpartners.com/news-and-insights/overview-of-uae-cryptocurrency-rules-fees-and-compliance
• https://cryptio.co/articles/vara-dubai-virtual-asset-regulations/
• https://insightplus.bakermckenzie.com/bm/financial-institutions_1/uae-securities-and-commodities-authority-issues-new-regulations-relevant-to-virtual-assets
• https://www.linklaters.com/en/insights/blogs/fintechlinks/2024/december/digital-assets-in-the-abu-dhabi-global-market-fsra-establishes-a-new-regulatory-framework
• https://www2.deloitte.com/xe/en/pages/risk/articles/vara-new-regulatory-framework.html
• https://www.ashurst.com/en/news-and-insights/legal-updates/abu-dhabi-regulator-issues-guidance-on-initial-coin-offerings-and-virtual-currencies/
• https://enterprise.press/news/sca-introduces-draft-regulation-for-security-and-commodity-tokens/
• https://research.hktdc.com/en/article/MTY3MDA0NDY0OQ
• https://www.shuraa.com/blog/is-cryptocurrency-legal-in-uae/
• https://en.cryptonomist.ch/2024/10/14/uae-central-bank-approves-stablecoin-aed/
• https://www.financemagnates.com/cryptocurrency/regulation/cbuae-board-of-directors-approves-new-system-for-licensing-stablecoins/
• https://cointelegraph.com/news/uae-retail-investors-increase-crypto-2025-etoro-survey
• https://blogs.loc.gov/law/2025/01/falqs-regulation-of-cryptocurrencies-in-the-gulf-cooperation-council-countries-part-one/
• https://www.crsblaw.com/knowledge-hub/in-depth-virtual-currency-regulation-united-arab-emirates
• https://www.emerald.com/insight/content/doi/10.1108/JMLC-08-2022-0119/full/html
• https://www.lawmiddleeast.com/practice-areas/fintech/the-uae-and-stablecoin-regulation
• https://laraontheblock.com/uae-and-usa-retail-investors-to-increase-investments-in-crypto-in-2025/
• https://cointelegraph.com/news/uae-regulations-crypto-payment-ban-lawyer
• https://dxboffplan.com/cryptocurrency-adoption-uae/
• https://www.cryptopolitan.com/uae-central-bank-digital-dirham-symbol/