How to Legally Buy, Sell, and Exchange Cryptocurrency in the UAE

In the UAE, you can freely buy and exchange cryptocurrencies for fiat currency, but the use of virtual currency for payment of goods and services is limited. In 2022, a law came into effect establishing cryptocurrency as a virtual asset. Nevertheless, buying, selling, and exchanging cryptocurrency is possible without any issues through specialized exchanges, and the legislation remains quite lenient for crypto companies.

How to Buy Cryptocurrency Legally in the UAE

The easiest way to buy cryptocurrency in the UAE is through an exchange regulated by the Dubai Financial Services Authority (DFSA). Stablecoins, whose value is tied to fiat currency, can be withdrawn into dirhams with the help of counterparties found on exchanges and other resources. Exchange in the opposite direction, from dirhams to crypto, is also possible. If you have a bank account, all transactions can be conducted electronically rather than in cash.

There are numerous exchanges and crypto ATMs in the Emirates, so the question of purchasing and using cryptocurrency is not a pressing issue. However, conducting transactions through exchanges may incur high fees. Crypto cards issued by some exchanges are much more convenient to use in the UAE. They can be funded from regular bank accounts and used to withdraw fiat currency.

Is Buying Cryptocurrency Legal in Dubai?

Operations with cryptocurrency are not prohibited in the UAE. On the contrary, the government encourages cryptocurrency businesses in the country, actively establishing a regulatory framework and supervisory authorities. The legal status of cryptocurrencies is clearly defined within the country's legal framework. Therefore, buying and using any cryptocurrencies in Dubai is completely legal.

Taxation of Cryptocurrency in the UAE

In accordance with the legislative framework, the sale of cryptocurrency is subject to Value Added Tax (VAT). The rate is 5%. Income tax, luxury tax, and capital gains tax are absent. Corporate tax is only levied on companies operating in the oil and gas sector and branches of foreign financial institutions. Cryptocurrencies are exempt from taxation in free zones and on the mainland, except for VAT.

Cryptocurrency Licenses in the UAE – What Are They?

A cryptocurrency license is a permission to conduct business related to digital currency. Exchanges, cryptocurrency platforms, and trading platforms require such licenses. Only individuals for personal use can buy or exchange crypto without a license, but they still do so through licensed intermediaries.

Benefits of the UAE for Cryptocurrency Trading

The opportunities available to crypto players in the Emirates are vast. The freedom to engage in activities with digital assets in the UAE, supported by transparent and fairly lenient legislation, allows for investment, capital attraction, goods sales, and asset acquisition with crypto, as well as earning on the crypto market infrastructure.

It is particularly advantageous to operate in the UAE for businesses that do not have minimum capital requirements for registration. Companies engaged in the following activities can obtain licenses directly:

• Investment projects for financing crypto startups
• Promotion of crypto products
• IT in the crypto business – software development, mining and pools, IT audit of crypto asset administration solutions, work on ensuring crypto security
• Acquisition of digital (virtual) assets for own funds, except for exchange transactions and brokerage services
• Trading using crypto assets, instruments, and Distributed Ledger Technology (DLT) – a technology that allows data sharing on the internet.

How to Get a Cryptocurrency License in the UAE

At the federal level, there is no law regulating operations with cryptocurrencies and NFTs in the UAE. However, legislative acts and resolutions are actively developed in individual emirates and free zones. For example, since March 2022, Dubai Law No. 4 has been in effect, which established a special regulatory authority – the Dubai Virtual Assets Regulatory Authority (DVRA). DVRA operates in the emirate of Dubai, including in free zones.

Regulation of operations with crypto assets is also carried out by the SCA and its subsidiary regulators in various free zones. For example, the Financial Services Regulatory Authority (FSRA) operates in the Abu Dhabi Global Market (ADGM) free zone, while the Dubai Financial Services Authority (DFSA) operates in the Dubai International Financial Centre (DIFC).

To obtain a license to work with crypto in the UAE, you need to contact the regulatory authority. The Dubai Economic Department (DED) is the main registrar in Dubai's local territory. Registration of foreign branches is handled by the UAE Ministry of Economy, while complex crypto directions are considered by the SCA – the main registrar in the UAE.

If you operate in a free zone, contact the local regulatory authority. The best free zones for working with crypto are:

• Dubai Multi Commodities Centre (DMCC)
• Dubai International Financial Centre (DIFC)
• Abu Dhabi Global Market (ADGM)
• Dubai World Trade Centre (DWTC)
• Dubai Airport Free Zone (DAFZ)

Cost of a License in the UAE

The cost of a cryptocurrency license in the UAE is $14,500. Additionally, you need to meet requirements regarding the size of the share capital, provide financial guarantees, and submit a business plan.

AML and CFT – are the executive body and the court to combat financial crimes. Special bodies and legislative acts related to working with crypto are expected to enhance the reputation of the UAE in the eyes of crypto investors and attract more foreign investments. If you are interested in obtaining a license, you need to be aware of all the changes.

Top Exchanges in the UAE

The first exchange that issued Bitcoin wallets and offered BTC acquisition services was BitOasis. The exchange still operates, and the number of available cryptocurrencies has significantly expanded. Other popular crypto exchanges in the UAE include:

• OKX. Offers a wide range of digital assets and actions with them. You can sell, exchange bitcoin, and other currencies. Features futures trading, an NFT marketplace, and crypto options.
• Luno. A trading platform where you can buy or sell crypto through a counterparty and exchange it for fiat. Like on other exchanges, deposits and withdrawals in dirhams are supported.
• Binance. The leading global crypto exchange where you can sell, exchange, and perform other operations with virtual currencies. Known for low fees and high liquidity on most pairs.

Due to the developed regulatory framework, the cryptocurrency business in the UAE is a transparent and understandable type of activity. Understanding the regulations for working with crypto, an entrepreneur or investor in the UAE can scale their business, diversify their portfolio, or preserve savings. The experts at The Level Consulting provide consultations on business regulation in the UAE and can assist in registering a company, finding commercial and residential real estate.