Expanding Horizons: Deepening Exchange in Financial Technology and Virtual Assets between Taiwan and Dubai
The innovation of regulatory policies in financial technology relies on continuous international exchange and learning. During the TOKEN2049 blockchain conference held in Dubai in mid-April, Tsai Yu-ling, the Honorary Chairman of the Taiwan FinTech Association, led a delegation of association members to visit the local Virtual Assets Regulatory Authority (VARA), including WeighTech Co., Ltd., Fusheng Digital Co., Ltd., Heya Digital Technology Co., Ltd., and Pioneer Digital Technology Co., Ltd., to engage in in-depth discussions 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 institution is responsible for overseeing the issuance, provision, and disclosure of virtual assets (including FT and NFT), and collaborates with federal agencies such as the Central Bank of the United Arab Emirates to establish ethical guidelines, policies, and strategic plans.
In Dubai, any entity providing virtual asset services must obtain a license from VARA and hold the corresponding commercial entity trading license to operate. Entities that violate Dubai’s virtual asset regulatory laws may face severe penalties, including license suspension.
During the exchange meeting, both parties deepened their understanding of each other’s financial technology and virtual asset regulatory frameworks and discussed VARA’s regulatory framework.
In the face of the rapid development of financial technology and virtual asset services, the Dubai government is committed to providing a robust regulatory environment for industry participants while maintaining an open attitude towards innovation. The principle-based regulatory model allows regulatory authorities and industry participants to focus more on the value brought by product and service innovation to the industry, and places greater emphasis on the activities and behavior of industry participants. This regulatory approach provides industry participants with flexibility to adapt and innovate in a rapidly changing market while ensuring consumer protection and market stability.
Exploring VARA’s Innovative Regulatory Strategy
During the conference, VARA representatives provided detailed explanations of the two-stage process for license applications: preliminary approval and complete document review. Through this process, all entities 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 commitment to ensuring high-quality financial services.
In addition to providing guidance for 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 open communication channels to stay updated on the latest developments and business plans of industry participants. Regarding the basic operational needs of industry participants, 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 entities in completing banking and trust services and compiling a list of accountants familiar with auditing the cryptocurrency industry to ensure that industry participants can smoothly operate their businesses while complying with local regulations.
The friendly interaction between regulatory authorities and industry participants enhances the operational capabilities and business motivations of industry participants in the Dubai market, and also 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 Dubai VARA
Promoting Innovation: VARA’s Regulatory Sandbox and Business Support
While encouraging innovation, maintaining market stability is one of VARA’s core strategies.
VARA tailor-made a regulatory sandbox for virtual asset service providers, allowing them to test new products and services in a guided and controlled environment without immediately meeting all regulatory requirements.
While service providers develop new products or services, regulatory authorities also provide compliance guidance in line with their principles. This provides entrepreneurs with a unique opportunity to evaluate the potential impact and effectiveness of their innovations before launching them in the market. VARA representatives stated that the design of the regulatory sandbox aims to reduce risks during the innovation process while collecting practical data on new technologies and business models to optimize their long-term regulatory framework.
For startups that do not yet have sufficient capital to independently complete license applications and compliance frameworks, VARA is also exploring the possibility of operating under the protection of a “regulatory framework provided by mature companies, allowing startups to operate as subsidiaries of the framework.” Although this program has not been formally implemented, it serves as a reference practice to help startups reduce the complexity and cost of initial operations and accelerate market entry.
Dubai: The Innovative Frontier of Virtual Asset Regulation Strategy
As of April 17, 2024, a total of 17 successful cases of VASP licenses issued by VARA have been recorded, and these cases come from enterprises from various countries. This demonstrates Dubai’s geographical and economic policy advantages, which serve as a springboard for expanding into the Middle East and even the global market. In addition, VARA not only supports the business development of resident companies but also actively engages in dialogue and cooperation with regulatory authorities in other countries to ensure the compliance and efficiency of cross-border services.
Through this professional exchange meeting between the Taiwan FinTech Association and VARA, we also hope to achieve more interaction and cooperation in promoting global technological innovation and improving business compliance. We also hope that Taiwan’s VASP startups can explore more opportunities for international expansion and cooperation through the platform established by VARA.
Opinion articles present diverse opinions and do not represent the views of “WEB3+”.
