Nexo Receives Initial Approval for Dubai License from VARA
Dubai’s Virtual Assets Regulatory Authority (VARA) has granted Nexo, a Bulgarian decentralized lending platform, an initial approval to operate and offer services in and from the Emirates. This approval is the first step in obtaining a full license, which includes an initial provisional permit, a preparatory license, and an operating license.
Nexo Pursues Full Approval for Virtual Asset Services in Dubai Amid Regulatory Challenges
Nexo DTC, the regional entity of Nexo, aims to secure full approval for activities such as lending and borrowing, management and investment, and broker-dealer operations. To obtain the full Virtual Asset Service Provider (VASP) license, Nexo must meet specific conditions set by VARA. Once completed, the company will qualify for operational approval, allowing it to offer regulated digital asset services.
In March 2022, Sheikh Mohammed bin Rashid Al Maktoum approved a new virtual assets law in Dubai, establishing a legal framework for crypto in the region. VARA was appointed to have enforcement powers in special development and free zones. The goal is to protect investor assets from scams and fraudulent activities while creating a growth map for Dubai to become a functioning Web3 hub.
Dubai has been actively working alongside Abu Dhabi to attract financial institutions and establish itself as a global crypto hub. VARA serves as the single custodial entity mandated to license and govern the burgeoning sector in Dubai.
Kalin Metodiev, co-founder and managing partner at Nexo, expressed enthusiasm for pursuing new market strategies aligned with VARA’s guidance.
Previously, Nexo faced regulatory challenges, including agreeing to pay $45 million to the SEC for failing to register its Earn Interest Product (EIP). Additionally, the company has sought $3 billion in damages from Bulgaria after an investigation found no evidence against it, alleging that the investigation brought Nexo into disrepute.
The Middle East is Becoming an Attractive Crypto Hub
Dubai has emerged as one of the most crypto-friendly hubs globally, earning praise from numerous crypto-related firms operating within the region. In recent months, Dubai’s regulatory body has granted operational licenses at different stages to several crypto exchanges and firms.
These developments solidify Dubai’s reputation as a crypto-friendly jurisdiction, showcasing a robust regulatory framework and comprehensive rulebooks for VASPs. All crypto firms undertaking or planning to undertake regulated activities within the region must apply for a regulated license with VARA.
The crypto regulatory framework in Dubai, introduced in February 2023, mandated that all crypto exchanges and service providers apply for operational licenses by November 17, 2023. VARA received over 1,000 registration applications from various crypto platforms.
Brad Garlinghouse, CEO of Ripple, highlighted Dubai as a prime example of a jurisdiction where regulators actively engage with the evolving crypto industry. He cited the city’s status as a global frontrunner, attributing its success to clear regulatory frameworks, policies promoting innovation, and an environment conducive to entrepreneurial endeavors.
Hot Take: Nexo’s Approval Signals Dubai’s Crypto-Friendly Stance
Dubai’s approval of Nexo’s initial license marks another significant step towards establishing itself as a leading global hub for cryptocurrencies. With its comprehensive regulatory framework and proactive engagement with the crypto industry, Dubai continues to attract crypto-related firms and investors. The approval of Nexo’s license showcases Dubai’s commitment to providing a secure and regulated environment for digital asset services.
This approval also highlights Nexo’s determination to expand its operations and services in Dubai. By pursuing a full license, Nexo aims to offer a wide range of regulated digital asset services, including lending and borrowing, management and investment, and broker-dealer operations. This move positions Nexo as a key player in Dubai’s growing crypto ecosystem.
As the Middle East becomes an increasingly attractive crypto hub, Dubai stands out as a jurisdiction that actively supports innovation and fosters entrepreneurship in the crypto industry. With its forward-looking culture and clear regulatory frameworks, Dubai is well-positioned to become a leading player in the global crypto landscape.
If you’re a crypto enthusiast or investor looking for a crypto-friendly jurisdiction with robust regulations and exciting opportunities, Dubai should be on your radar. Its commitment to creating a safe and thriving crypto ecosystem makes it an ideal destination for companies like Nexo to establish their presence and offer regulated digital asset services.
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