The Virtual Asset Regulatory Authority (VARA) recently provided the much-awaited guidelines for virtual asset service providers (VASPs) in Dubai, United Arab Emirates, which included a ban on privacy coins.
On Feb. 7, VARA released several rulebooks for VASPs including the “Virtual Assets and Related Activities Regulations 2023” in which VARA mentioned a prohibition on privacy coins. In the document, VARA wrote:
“The issuance of Anonymity-Enhanced Cryptocurrencies and all VA Activity[ies] related to them are prohibited in the Emirate.”
Cointelegraph reached out to several players within Dubai and a privacy protocol project to find out how market participants feel about the updated guidance on crypto in Dubai.
Dubai’s VARA,has issued its Virtual Assets and Related Activities Regulations 2023.The Regulations set out a comprehensive Virtual Asset (VA) Framework built on principles of economic sustainability & cross-border financial security. https://t.co/XXDPdktpuY pic.twitter.com/MdVPgSW5AT
— Dubai Media Office (@DXBMediaOffice) February 7, 2023
Effects of the ban on privacy coin issuance and activities
According to Khaled Moharem, the president of the blockchain-based payments ecosystem WadzPay MENA, the news did not come as a surprise because other regions have made similar indications. Moharem told Cointelegraph that while more time is needed to fully assess the implications of the new development, their initial assessment shows that issuance will be banned. He explained that:
“At the end of the day, money whether physical or digital does require some degree of traceability. While there was an incorrect bias that digital currencies such as Bitcoin and Ethereum are untraceable this was not actually the case.”
He added that this is the reason why their crypto payments company implements know your customer (KYC) and anti money laundering (AML) measures which ensure that funds are not used for illicit purposes.
Moharem also noted that their firm welcomes the guidelines from VARA. He pointed out that while this may eliminate a small segment of digital currencies, it confirms the legitimacy of other digital currencies like Bitcoin (BTC) and Ether (ETH).
“Our company is very pro-regulation, and having a clear framework by which to operate in will only strengthen the industry…This news is potentially significant for growing digital currency payments, as the government is showing that they are protecting consumers, as well as vendors.”
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