Crypto in Dubai : the complete guide

What are the regulations on crypto in Dubai?

Regulations can change quickly and it is important to check the latest updates with official sources or specialist legal advice. Here is an overview of cryptocurrency regulations in Dubai:

• Regulation of cryptocurrency platforms: Dubai has issued licences for certain cryptocurrency exchange platforms, allowing them to operate under regulatory oversight. This is to ensure transparency, security and compliance with anti-money laundering and anti-terrorist financing standards.

• ICOs (Initial Coin Offerings): Dubai has put in place guidelines for ICOs, encouraging issuers to meet certain standards and provide transparent information to investors. This is to protect investors and avoid fraudulent practices.

• Favourable regulatory framework: Dubai has sought to encourage innovation in blockchain and cryptocurrency technologies by creating a favourable regulatory environment for companies operating in this sector. This has attracted many cryptocurrency-related startups and projects to the region.

• Financial licence for cryptocurrency companies: Dubai also offers a specific financial licence for companies operating in the field of cryptocurrencies and blockchain technology. This licence allows companies to carry out legal activities related to cryptocurrencies and blockchain.

• AML/CFT compliance framework: Companies involved in cryptocurrencies in Dubai are required to comply with AML/CFT standards, similar to those applied to traditional financial institutions.

• Use of cryptocurrencies: Although cryptocurrencies are permitted to be held and used for commercial purposes, they are not considered legal tender in Dubai. However, they can be used for various transactions, purchases and investments.

How is cryptocurrency taxed in Dubai?

Dubai is renowned for its favourable tax regime, particularly when it comes to cryptocurrencies. However, please note that tax regulations can change, and it is important to consult official sources or tax experts for the most up-to-date and accurate information. Here is a general overview of cryptocurrency taxation in Dubai:

• Income and capital gains tax: To date, Dubai does not generally tax income from the sale of cryptocurrencies or capital gains made by individuals. This means that if you make profits from selling cryptocurrencies, you are generally not required to pay tax on these gains in Dubai.

• Taxation of commercial transactions: If you are using cryptocurrencies for commercial purposes, such as paying for goods and services, it is advisable to check the specific tax regulations for your business. In some cases, commercial transactions involving cryptocurrencies may be subject to local taxes.

• No VAT on cryptocurrencies: Dubai does not levy value added tax (VAT) on cryptocurrency transactions.

• Tax residency implication: The absence of income or capital gains tax on crypto in Dubai can be an attractive factor for international investors. However, it is important to understand the tax residency rules, as in some cases you may be subject to the tax laws of your country of residence.

It is crucial to comply with current tax laws and regulations and to consult tax professionals for advice specific to your situation. Tax and regulatory information can change, and it is essential to stay informed and consult official sources for the latest updates.

Is it possible to buy goods and services in crypto in Dubai?

It is generally possible to buy goods and services in crypto in Dubai. Due to its favourable regulatory environment and willingness to promote technological innovation, Dubai has seen the emergence of various businesses and shops that accept payments in cryptocurrencies. However, it is important to note a few key points:

• Acceptance of cryptocurrencies: Many businesses, restaurants, hotels and other establishments in Dubai have started accepting cryptocurrencies as a method of payment. This can include well-known cryptocurrencies such as Bitcoin, Ethereum and others.

• Variability in acceptance: Although more and more businesses in Dubai are accepting cryptocurrencies, there can be variability in the level of acceptance and the types of cryptocurrencies accepted. It is recommended to check with the specific business before making a purchase.

• Online and in-person payments: Cryptocurrency payments in Dubai can be made both online and in-person, depending on the options offered by different businesses.

• Benefits and considerations: Using cryptocurrencies to make payments in Dubai can offer benefits such as faster transactions and the ability to diversify your payment methods. However, it is necessary to note that prices can be subject to the volatility of the cryptocurrency market, which can lead to fluctuations in value at the time of purchase.

• Regulatory compliance: Although Dubai has a favourable approach towards cryptocurrencies, it is important to ensure that cryptocurrency transactions comply with local regulations and applicable laws, particularly with regard to anti-money laundering and anti-terrorist financing standards.

What does the Dubai Virtual Assets Regulation Law put in place?

Dubai has passed a new law regulating cryptocurrencies, becoming one of the first jurisdictions in the world to do so. This law, called the Dubai Virtual Assets Regulation Law, creates a legal framework for the protection of cryptocurrency investors.

This regulation is important because it lays the groundwork for cryptocurrencies to come to the fore in Dubai.

Following the announcement of this new regulation, many companies and private investors interested in cryptocurrencies decided to set up in the Emirates to take advantage not only of this new infrastructure, but also of significant tax benefits.

It is therefore natural that many crypto companies such as Binance, FTX, Crypto.com and Bybit have recently chosen Dubai, the most populous city in the United Arab Emirates, to establish a regional or international base.

Indeed, the new law on virtual assets has been a key factor for companies looking to position themselves on the international stage, as well as providing regulatory clarity so that they can be recognised by European countries.

Under the law, companies dealing in cryptocurrencies must register with the VARA (Virtual Asset Regulation Authority) and therefore establish their presence in Dubai.

They will also be subject to anti-terrorism and anti-money laundering regulations and will have to maintain ‘know your customer’ procedures.

The DFSA also oversees the exchanges on which cryptocurrencies are traded. These exchanges will be required to implement measures to prevent market manipulation and other abuses.

How much tax is payable when selling cryptocurrencies?

Dubai does not generally tax capital gains from the sale of cryptocurrencies. Therefore, in most cases, investors and holders of cryptocurrencies are not required to pay tax on profits made from the sale of their crypto in Dubai.

However, it is crucial to note that tax regulations can vary and evolve, and it is recommended that you consult official Dubai government sources, as well as local tax experts, for the most up-to-date and accurate information.

If you are considering selling cryptocurrencies in Dubai or elsewhere, it is essential to understand the tax implications in your jurisdiction and to comply with applicable tax laws and regulations. Tax rules can be complex and vary depending on factors such as length of holding period, amount of gain, purpose of sale, and other specific considerations. For more detailed advice and personalized assistance, contact us and let us help and support you with our local partners.