Dubai has become a popular destination for setting up cryptocurrency businesses and for good reasons.
The UAE has quickly emerged as one of the most crypto-friendly destinations in the world, offering a progressive regulatory framework and a business environment conducive to the growth of blockchain and cryptocurrency ventures.
The company formation process for Crypto businesses has also become easier and more flexible with jurisdictions offering crypto licenses. All of this along with the possibility of tax-free income has made the UAE extremely attractive for setting up cryptocurrency businesses and managing digital assets.
As crypto licenses are still relatively new, it’s best if the company registration process for crypto businesses is done by professionals to avoid possible complications.
This guide walks you through the essential steps and practical tips to establishing a cryptocurrency business in the UAE, the benefits of doing so, and the regulatory requirements.
Why set up a cryptocurrency business in Dubai
The UAE has taken a proactive approach to blockchain and cryptocurrency adoption, recognizing the potential of these technologies to drive innovation and economic growth.
With the Dubai Multi Commodities Centre (DMCC) and Abu Dhabi Global Market (ADGM) leading the charge, the UAE has created a regulatory environment that offers:
Specialized jurisdictions for cryptocurrency
Some of the UAE free zones have started focusing specifically on crypto businesses and setting up clear frameworks that would facilitate crypto company formation in the UAE.
Setting up your business in these free zones can also help with finding specialized labor and connecting with an active network in the crypto industry.
Tax Benefits
No corporate or income taxes for most businesses, making the UAE highly attractive for crypto entrepreneurs.
100% ownership
You can set up your crypto business in UAE and have 100% foreign ownership. There’s no need for a local Emirati sponsor when registering your business in the UAE free zones.
Blockchain Innovation
The UAE is home to various blockchain projects, with the Dubai government aiming to become fully blockchain-powered by 2030.
Fast set up
Cryptocurrency business setup in Dubai free zones takes about 4 days and can be done completely remotely. This means you wouldn’t have to be present for any of the setup steps and can instead focus on the other aspects of developing your business.
UAE’s accommodating infrastructure for crypto businesses
UAE has always been ahead of the game in terms of adopting and accepting new technologies and has acted the same with cryptocurrency. While many other countries are still on the fence, the UAE has established frameworks and regulations that allow businesses to trade and manage their digital assets practically while also staying within the rules.
The following events highlight UAE’s promising infrastructure for nurturing cryptocurrency businesses:
- UAE has launched the “Blockchain Strategy 2021” which aimed to capitalize on blockchain technology to transform 50 percent of government transactions into the blockchain platform by 2021.
- In 2021, Dubai was home to the AIBC summit, bringing together brands and businesses in AI, Blockchain, etc to discuss the future of this emerging technology.
- Dubai and Abu Dhabi free zones have started issuing crypto trade licenses and have also implemented advanced frameworks to encourage entrepreneurs in the crypto industry to set up exchanges while also setting out rules to protect consumers.
- Currently, more than 400 crypto businesses are operating in the UAE and this number is rapidly growing due to UAE accelerating the crypto economy. It is expected that there will be more than 1000 cryptocurrency businesses in Dubai by the end of 2022.
- Dubai held its first crypto expo in March 2022 as a networking event for entrepreneurs and investors to explore more business opportunities in this industry.
Legal and Regulatory Framework for Crypto Businesses in the UAE
The UAE has established a strong regulatory framework for crypto businesses, primarily led by the Securities and Commodities Authority (SCA) and authorities within free zones such as DMCC, ADGM, and the Dubai International Financial Centre (DIFC).
Below are the key regulatory bodies and their roles:
Securities and Commodities Authority (SCA)
The SCA oversees crypto-related financial activities in the UAE, ensuring that crypto businesses adhere to regulations aimed at protecting investors and preventing financial crimes. Crypto businesses must be licensed by the SCA to operate legally in the UAE.
Abu Dhabi Global Market (ADGM)
ADGM has been one of the pioneering regulatory bodies in providing a framework for the operation of crypto businesses. ADGM’s Financial Services Regulatory Authority (FSRA) offers clear guidance and licensing requirements for cryptocurrency exchanges, custody services, and other crypto-related businesses.
Dubai Multi Commodities Centre (DMCC)
DMCC is home to a vibrant crypto ecosystem. In 2021, DMCC launched its Crypto Centre, which offers a hub for businesses involved in blockchain, DeFi (decentralized finance), and crypto trading. DMCC also provides licensing specifically for crypto businesses.
Dubai International Financial Centre (DIFC)
DIFC offers a FinTech ecosystem that supports blockchain and cryptocurrency ventures. While DIFC primarily focuses on financial services, it has adopted blockchain technologies for specific use cases, and its regulations complement the overall regulatory landscape.
Steps to crypto business setup in Dubai
- Decide on the free zone and company type (LLC or sole establishment)
- Choose an activity
- Consult with a business setup expert from Nexus Partners before finalizing any details
- Reserve and register a company name
- Get necessary pre-approvals from free zone authorities
- Lease an office/virtual office
- Apply for the crypto license from the respective free zone authority
- Apply for and obtain a company establishment card
- Apply for and obtain an investor’s visa
- Open corporate bank account in UAE
- Register for TRN number
Where to set up a crypto business in Dubai
The two primary choices for crypto businesses are DMCC and ADGM. Both offer specialized licensing for cryptocurrency businesses, but your choice will depend on your business model, target market, and long-term goals.
DMCC – Dubai Multi-Commodities Centre
DMCC is one of the fastest-growing free zones in Dubai and home to businesses from various industries.
DMCC has lately started accommodating the crypto business more seriously by providing crypto licenses and working and building stronger and more practical regulations through cooperating with Securities and Commodities Authorities (SCA).
The DMCC cryptocurrency license allows you to perform business activities such as providing crypto-related services, storing cryptocurrency, trading, management, developing cryptocurrency-related software, etc. You can also provide advisory services and consultation with this cryptocurrency license.
What’s more interesting about choosing DMCC as your new crypto business’s home is that it has recently opened a crypto center that aims to be the hub for all blockchain activities in Dubai, supporting entrepreneurs and investors with its highly developed ecosystem.
Ahmad Hamza Executive Director of DMCC Freezone says the center wants to provide an array of services for crypto and blockchain companies and platforms to help them not just set up, but also flourish and succeed.
DMCC currently issues 2 license types for crypto businesses:
Crypto Trading License
This license is best for businesses engaging in buying and selling crypto commodities developed on distributed ledger technology applications. It’s important to note that this license doesn’t permit activities such as crypto brokerage services, crypto exchange, financial services, banking services, storage services, or payment processing.
This license can not be combined with other activities and is only limited to the crypto trade.
Distributed Ledger Technology Services
This license allows for conducting activities such as database management solutions and ancillary services based on distributed ledger technologies, for instance, blockchain.
Businesses with Distributed Ledger Technology licenses are not allowed to trade or exchange any type of currency.
DAFZA – Dubai Airport Free Zone Authority
DAFZA is another reputable free zone based in Dubai that has welcomed crypto businesses by signing an agreement with the Securities and Commodities Authority (SCA).
DAFZA aims to support the regulation, offering, issuance, listing, and trading of crypto assets within its free zone.
Businesses investing in cryptocurrencies can obtain their trade license from DAFZA. SCA will also issue the necessary approvals for them.
ADGM – Abu Dhabi Global Market
ADGM is a financial center located in the capital of UAE. This free zone issues trade licenses for crypto businesses and crypto-assets regulated by the Financial Services Regulatory Authority (FSRA).
SRTI Park – Sharjah Research Technology and Innovation Park
SRTI Park is an innovative free zone based in Sharjah dedicated to startups active in research and development.
This free zone has recently started issuing crypto trade licenses as Distributed Ledger Technologies licenses with the first one being for OODLE Market Place, a blockchain-based incentivized commodity trading platform with a utility token used within its community.
Requirements & documents for crypto business setup in UAE
The requirements might vary based on the respective free zones guidelines. Here are a few you should consider in advance:
- Copies of the passports of all the shareholders
- Proof of necessary capital
- Adherence to undertaking letters from VARA
- Companies must comply with the UAE’s Anti-Money Laundering and Counter-Terrorism Financing Law (AML-CFT)
- Clean crypto wallet record with no fraudulent transactions or activities
- Disclosure of Ultimate Beneficial Ownership (UBO)
- Business plan with the cryptocurrency license in Dubai
Challenges to cryptocurrency company formation in UAE
Banking Difficulties
While the UAE is opening up to crypto businesses, some banks may still be cautious about offering banking services to crypto companies. It is essential to work with a business setup consultancy that can connect you with banks that understand the crypto sector.
Compliance and Regulatory Changes
Crypto businesses must stay up-to-date with the latest regulations. While the UAE offers a friendly environment for crypto, it also ensures that businesses comply with international standards regarding AML and KYC.
Ongoing Monitoring and Reporting
Crypto companies are required to regularly report their activities to the relevant authorities and implement robust AML/KYC processes to prevent financial crime. This may add a layer of responsibility and cost.
How Nexus Partners can help
Even though UAE has been very welcoming, setting up a crypto business in UAE can still be complicated given most of the regulations and laws in this regard are recent.
Nexus Partners business setup consultants can handle all this process on your behalf. We will go forward with your business setup and all the required steps including bank account opening, financial audits, and Economic Substance Regulations (ESR) fast and efficiently.
If you still have questions about setting up your cryptocurrency business in Dubai, you can simply request a free consultation from us. Our advisors will get in touch with you and provide you with valuable advice on the best setup route for your business after genuinely listening to your business needs and goals.