Expanding Horizons: Deepening Financial Technology and Virtual Asset Exchange between Taiwan and Dubai
The innovation and regulation of financial technology rely on continuous international communication and learning. During the TOKEN2049 blockchain conference held in Dubai in mid-April, led by Cai Yuling, Honorary Chairman of the Taiwan FinTech Association, the association’s members visited the Virtual Assets Regulatory Authority (VARA) in Dubai. The delegation included representatives from Weight Technology Co., Ltd., Full Rise Digital Co., Ltd., HeYa Digital Technology Co., Ltd., and Pioneer Digital Technology Co., Ltd. They conducted in-depth exchanges on industry regulation with VARA’s CEO, Matthew White.
As an autonomous entity with legal status and financial independence, VARA is responsible for protecting and regulating the interests of stakeholders in virtual asset services. The organization is responsible for supervising the issuance, provision, and disclosure of virtual assets (including FT and NFT) and collaborates with federal institutions such as the Central Bank of the United Arab Emirates to develop ethical standards, policies, and strategic plans.
In Dubai, any entity that provides virtual asset services must obtain a license from VARA and have the corresponding commercial trade license to operate. Entities that violate Dubai’s virtual asset regulatory laws may face severe penalties, including license suspension.
During the meeting, both parties deepened their understanding of each other’s financial technology and virtual asset regulatory frameworks and discussed VARA’s regulatory framework. The Dubai government authorities are committed to providing a robust regulatory environment for operators while maintaining an open attitude towards innovation in the face of the rapid development of financial technology and virtual asset services. The principle-based regulatory model allows regulatory agencies and operators to focus more on the value brought by product and service innovation to the industry and pay more attention to the activities and behavior of operators. This regulatory approach gives operators a certain degree of flexibility, enabling them to adapt and innovate in a rapidly changing market while ensuring consumer protection and market stability.
Exploring VARA’s Innovative Regulatory Strategies
At the conference, VARA representatives provided a detailed explanation of the two-stage process of license application: preliminary approval and complete document review. Through this process, all operators wishing to operate virtual asset services in Dubai must comply with local laws and regulations. VARA’s transparent process, coupled with strict regulatory standards, reflects the regulatory authority’s attitude towards ensuring high-quality financial services.
In addition to guiding license applications, VARA also shared how it provides necessary support and establishes partnerships for virtual asset service providers. For applicants and existing service providers, VARA maintains smooth channels of communication to stay updated on the latest developments and business plans. To meet the basic needs of operators, VARA actively communicates with local banks, accounting firms, and other financial service institutions to help more institutions understand and support virtual asset-related businesses. This includes supporting licensed operators in opening bank accounts and trust services, as well as compiling a list of accountants familiar with cryptocurrency industry audits to ensure that operators can smoothly operate their businesses while complying with local regulations.
The friendly interaction between regulatory agencies and operators enhances the operational capabilities and business motivations of operators in the Dubai market and helps consolidate Dubai’s development environment towards global innovative financial technology. Dubai provides an ideal opportunity for global virtual asset service providers to enter the international market through the platform created by VARA.
References:
Introduction to the VASP Regulatory Framework proposed by VARA in Dubai
Promoting Innovation: VARA’s Regulatory Sandbox and Business Support
While encouraging innovation, maintaining market stability is one of VARA’s core strategies. VARA tailors regulatory sandboxes for virtual asset service providers, allowing them to test new products and services in a guided and controlled environment without immediately meeting all conventional regulatory requirements.
While operators develop new products or services, the regulatory agency also provides compliance guidance in a rolling manner that complies with its regulations. This provides entrepreneurs with a unique opportunity to assess the potential impact and efficacy of their innovations before launching them in the market. VARA representatives stated that the design of the regulatory sandbox aims to reduce risks in the innovation process while collecting practical data on new technologies and business models to optimize its long-term regulatory framework.
For startups that lack sufficient capital to independently complete license applications and compliance frameworks, VARA is also exploring the option of operating under the protection umbrella of mature companies, allowing startups to operate as subsidiaries of the framework. Although this program has not been formally implemented, it can help startups reduce the complexity and cost of initial operations and accelerate their entry into the market.
Dubai: The Innovative Frontier of Virtual Asset Regulation
As of April 17, 2024, a total of 17 cases have successfully obtained the Virtual Asset Service Provider License (VASP License) issued by VARA. These cases are from companies from various countries, demonstrating Dubai’s geographical and economic policy advantages as a springboard for expanding into the Middle East and global markets. In addition, VARA not only supports the business development of resident companies but also actively engages in dialogue and cooperation with regulatory agencies in other countries to ensure the compliance and efficiency of cross-border services.
Through the professional exchange meeting between the Taiwan FinTech Association and VARA, it is also expected to gain more interaction and cooperation in promoting global technological innovation and improving business compliance. It is also hoped that Taiwan’s VASP startups can explore more opportunities for cross-border expansion and cooperation through the platform created by VARA.
Opinion articles present diverse perspectives and do not represent the position of “WEB3+.”