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Dubai’s Virtual Assets Regulatory Authority (VARA) prohibited all activities involving privacy coins such as Monero (XMR) and Zcash (ZEC).
The regulator has also enforced certain rules on the domestic cryptocurrency sector to turn the city into an “international hub for virtual assets.”
Dubai’s new Policy
According to the recently released document, operations with anonymity-enhancing digital assets like XMR and ZEC are now forbidden in the financial heart of the United Arab Emirates – Dubai.
The local watchdog also set authorization requirements that crypto firms need to pass before popping up in the region.
The most fundamental principles include anti-money laundering obligations, marketing protocols, prevention of insider trading, and observing whether the asset class is used in criminal activities. Angela Ang – Senior Policy Advisor at blockchain intelligence firm TRM Labs – commented:
“Any obfuscation of fund flows poses a challenge to detecting illicit activities, so it is unsurprising that regulators react strongly to these kinds of asset classes and mechanisms.”
The updated regime aims to provide maximum security for local consumers and establish Dubai as a global center of blockchain technology. The regulator previously gave provisional licenses to Binance and Crypto.com to provide services in the area, while FTX was allowed to establish regional headquarters.
The biggest airline company in the UAE – Emirates Airline – displayed intentions to accept bitcoin as a means of payment and use blockchain technology to trace records of aircrafts.
Another example of Dubai’s pro-crypto stance is the luxurious five-star hotel Palazzo Versace Dubai. It allowed clients to pay for accommodation, spa services, and dining in digital currencies. The supported assets are Bitcoin (BTC), Ether (ETH), and Binance Coin (BNB).
Not Only Dubai
The Japanese authorities prohibited the usage of privacy coins, such as Monero (XMR), Zcash (ZEC), and Dash (DASH), in 2018 over concerns that wrongdoers employ such tokens in their illicit operations.
Some of the leading exchanges have also de-listed those assets from their platforms. Bittrex did so at the beginning of 2021 without providing any particular reason.
Huobi Global paused the trading of seven privacy coins (with XMR and ZEC being some of them) in September 2022 “in compliance with the latest financial regulations.”