Dubai’s virtual asset regulator has confirmed a full ban on privacy tokens and introduced stricter guardrails for stablecoins, reinforcing the emirate’s focus on traceability, licensing and consumer protection in its crypto regime.
Privacy Tokens Outlawed in Dubai
Dubai’s Virtual Assets Regulatory Authority (VARA) has prohibited all virtual asset service providers from issuing, listing or facilitating transactions in anonymity‑enhanced cryptocurrencies such as Monero and Zcash. The regulator defines these privacy tokens as assets that prevent tracking of ownership or transaction flows in ways current compliance tools cannot adequately mitigate.
The ban covers trading, custody and related activities for privacy tokens within VARA’s jurisdiction, including most of Dubai’s mainland and free zones outside the Dubai International Financial Centre. Violations of VARA’s virtual asset rulebooks can trigger fines that reach tens of millions of dirhams for firms, alongside potential license suspension or revocation for serious breaches.
Tighter Stablecoin Governance
In parallel, the UAE has rolled out a two‑pillar structure for stablecoins, led by the Central Bank’s Payment Token Services Regulation and VARA’s virtual asset framework. The Central Bank requires payment tokens, including dirham‑pegged stablecoins, to maintain full fiat reserves, offer redemption at par and operate under a dedicated license.
For Dubai‑focused activity, VARA treats non‑AED fiat‑referenced tokens such as dollar‑pegged stablecoins as a distinct category that needs token‑specific approval, 1:1 backing in high‑quality liquid assets, daily reconciliations and ongoing reporting. Foreign stablecoins like USDC can be used on licensed platforms for trading and investment, while everyday retail payments in the wider UAE are limited to Central Bank‑approved dirham tokens.
Licensing, Oversight and Enforcement
VARA’s broader rulebooks require all virtual asset service providers in Dubai to obtain licenses before marketing or describing themselves as crypto businesses. Requirements span anti‑money‑laundering controls, market‑conduct rules, cybersecurity standards and detailed disclosure obligations for products offered to retail users.
Entities that trade large volumes or operate stablecoin‑linked services must also meet enhanced registration and risk‑management expectations. Legal and compliance advisers note that Dubai’s approach now combines a categorical ban on privacy tokens with a tightly supervised, reserve‑backed model for stablecoins, positioning the emirate as a highly controlled environment for institutional‑grade virtual asset activity.
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