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Set up a Crypto Business in the Dubai International Financial Centre (DIFC)

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The Dubai International Financial Centre (DIFC) is among Dubai, UAE’s leading free zones. It provides commercial entities a wide range of services/facilities to help ease their business proceedings in the UAE. DIFC also offers license services to crypto companies. As a leading Dubai free zone, DIFC also has its own regulatory framework, separate from the UAE’s government regulations. This is why DIFC is gaining increasing popularity among fintech and digital finance companies.  

For companies to operate their cryptocurrency business in DIFC, they will need to obtain a license from the DIFC Authority. Also, the Dubai Financial Services Authority (DFSA) is the regulator for DIFC. It is the governing authority that establishes the licensing framework for virtual asset service providers as well as outlining the requirements for obtaining a license to operate their business in the Dubai International Financial Centre. The DFSA also ensures the veracity and safety of the virtual asset activities while providing an additional layer of transparency and certainty to market participants. However, the licensing framework only establishes the standards for virtual asset service providers; it does not directly regulate crypto activities themselves. 

Dubai International Financial Centre (DIFC): Crypto Token Regime

The Crypto Token Regime is part of the DFSA’s regulatory regime for virtual assets. It belongs to the second phase of the regime which was introduced in 2021 along with the Investment Token Regime. Since the emergence of crypto tokens in Dubai, the scope for financial services has increased. Digital financial services now include dealing, advising, arranging, trading and custody, for application in services and products provided concerning crypto tokens. 

This new regime states that financial services and activities can be conducted only with recognised crypto tokens. As per an initial list shared by the DFSA, Bitcoin, Ethereum, and Litecoin are now recognised crypto tokens in the UAE. A DIFC crypto license is always in keeping with the latest laws. Therefore, there are constant amendments to the pre-existing laws and rulebook modules that DIFC makes to stay on top of the game for this newly emerging technology. Additionally, DIFC will keep on adding to this public list as applications for starting a crypto business in the UAE pour into the DFSA. 

Trade in the UAE with a DIFC Crypto License

The ruler of Dubai His Highness Sheikh Mohammed bin Rashid Al Maktoum issued Law No. (5) in 2021 pertaining to DIFC. The law confirms that business entities registered in DIFC can trade outside of the DIFC under the condition that the services are primarily provided outside the firm’s premises in the DIFC area. Activities such as marketing and promotions are also allowed out of the centre. 

DIFC Crypto License: Types & Categories of Activities

There are several categories and types of licenses that cryptocurrency businesses qualify for. These can also include licenses for operating virtual asset exchanges, operating a virtual asset wallet provider, and even providing virtual asset custody services. Businesses that have tied up with DIFC must therefore follow its regulatory framework including its stringent AML and KYC processes.  

The Dubai International Financial Centre offers these crypto businesses activities: 

  • Virtual Asset Exchange: Companies that have a virtual asset exchange license can set up a platform for crypto trading (buying and selling) as well as other digital assets. 
  • Virtual Asset Wallet Provider: Through this license, companies can provide secure storage for cryptocurrency and other digital assets.  
  • Virtual Asset Custody Service: A virtual asset custody service license is essential for those companies that wish to safely store and manage digital assets for others who are their clients. 
  • Virtual Asset Brokerage: Any company that wants to facilitate the trading of various digital assets such as cryptocurrencies on behalf of their clients must acquire a virtual asset brokerage license.
  • Virtual Asset Management: Companies can manage digital assets including cryptocurrencies on behalf of their clients with a virtual asset management license. 

Note: Though the Dubai International Financial Centre (DIFC) issues crypto licenses for the above-mentioned activities, the DIFC Authority strictly regulates and oversees them. To get a DIFC crypto license, entrepreneurs must comply with anti-money laundering (AML) and Know Your Customer (KYC) processes. They will also be subject to layered security measures to help secure the safety of their digital assets. 

DIFC Crypto License: What to Expect?

Crypto companies applying to start a crypto business in DIFC should be compliant with the Crypto Token Regime laid out by the DFSA. New entrepreneurs will be applicable to follow the regime since its introduction from November 1, 2022. However, for already existing license holders, i.e., those who provide crypto token related services, they get a 6-month window of transition to submit their crypto token recognition applications for assessment by the DFSA. 

The United Arab Emirates is well on its way to becoming a global leader for digital and virtual assets. And the Crypto Token Regime is among the latest evolutions made in the UAE to cement its position as the nexus for the next Industrial Revolution. Therefore, crypto companies that want to make UAE their base of operations can seek out the services of trusted corporate consultancies like Shuraa Business Setup to get the correct guidance for their business. 

Our corporate consultants will help you decide which will be the best jurisdiction for your business model as well as depending on the activities you wish to conduct. 

List of Virtual Asset Service Provider Activities that the Crypto Token Regime covers:

  • Dealing as either principal or agent for recognised virtual assets 
  • Managing clients’ virtual assets 
  • Dealing in virtual asset investments 
  • Virtual assets trading/ providing trading platforms and exchanges 
  • Marketing virtual assets 
  • Custody provisions for virtual assets 
  • Sales advisory for buying & selling if virtual assets  

Benefits of acquiring a DIFC Crypto License

There are several advantages to starting a Crypto company in DIFC –  

Legal & Regulatory Framework

  • The current legal framework supports cross-border activities 
  • Get 100% business ownership as an expat 
  • Unlimited hiring of foreign employees 
  • 100% repatriation of capital 

Tax Benefits

  • Employee income – Zero Tax 
  • Profits, capital or assets from 2004 – Zero tax for 50 years 

Counterparty Confidence

  • DIFC is highly regarded as an independent regulator 
  • Part of an independent, English-speaking common law judicial system 
  • Risk based regulatory approach 

Diverse Ecosystem

  • Access to central regional deal making 
  • Concentrated access to international firms, investment funds, banks, wealth management firms, as well as a variety of financial institutions 
  • Globally renowned regional/international law and auditing firms 
  • Largest fund domicile in the region 

Geographic Epicentre

  • DIFC provides an opportunity for management offices, holding companies, and offices to be closely located to the assets they own/manage 
  • Dubai is also the commercial capital of the Middle East, North Africa, (MENA) and South Asia  
  • Finally, Dubai has a wealth of resources to reap the potential of internationally developing markets 

How much will a DIFC Crypto License Cost?

Businesses and start-ups wanting to start their business in the Dubai International Financial Centre can come to Shuraa for customised quotes. However, it is important to note that you will need to pay additional costs depending on the nature of the business activities as well as for any regulatory approvals. 

Get your DIFC Crypto License today

Dubai is home to several free zones that offer world-class industry specific services. However, it can be tough sometimes for new business owners and investors to navigate the complicated legal water of a foreign country. Therefore, the best option is to utilise the services of reliable company formation experts like Shuraa Business Setup.  

Grab hold of the experience that 22 years in the Dubai industry brings and explore a world of benefits. Get free VAT and tax consultations, corporate banking setup, PRO and visa services to usher your crypto company to the next century. 

Contact us today at +971 4 4081900. We are also available on WhatsApp: +971 50 7775554 and Email: [email protected]. 

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Date: July 26th, 2024
Time: 11:00 AM to 2:30 PM