SCA Virtual Asset Guidelines 2025: What Crypto Businesses Need to Know

The recently issued SCA guidelines provide a comprehensive framework for the regulation of Virtual Assets (VAs) and Virtual Assets Service Providers (VASPs) in the UAE, excluding financial free zones (ADGM & DIFC). Below is a detailed analysis and key takeaways from the guidelines, along with the necessary steps to apply for a license as a VASP.

Key Points from the Guidelines:

1. Scope and Definitions:

1. The guidelines apply to various VA activities, including VA platform operation, VA brokerage, safe custody of VAs, financial consulting in VAs, and managing VA portfolios.
2. VAs are defined as digital representations of value that can be traded or digitally transferred for investment purposes, excluding digital currencies, and securities.

2. Licensing Requirements:

1. Entities must comply with SCA regulations and obtain the necessary licenses to conduct VA activities.
2. Licensing requirements include adherence to modules outlined in the Rulebook:

• Module 1: General Provisions
• Module 2: Licensing and Accreditation
• Module 3: Conduct of Business
• Module 4: Capital Adequacy
• Module 5: AML/CFT (Anti-Money Laundering and Combating the Financing of Terrorism)

3. Specific paid-up capital requirements for different activities:

• VA platform operator: AED 1 million (or AED 5 million if combined with other VA services),
• Safe custody of VAs: AED 4 million,
• Financial consulting in VAs: AED 500,000,
• Managing VA portfolios: AED 3 million,
• VA brokerage: AED 2 million,
• VA dealership: AED 30 million.

4. Definition of Virtual Assets Activities:

1. Virtual Asset Platform Operator: An entity that provides services for operating and managing a platform where virtual assets can be traded. This includes ensuring market integrity, transparency, fair trading practices, and the safe custody of virtual assets.
2. Safe Custody of Virtual Assets: A service where an entity holds and manages virtual assets on behalf of clients, ensuring their security, proper management, and safekeeping. This includes robust security measures for storing cryptographic keys and wallets.
3. Financial Consulting in Virtual Assets: Offering Advisory Services related to virtual assets. This includes providing insights and advice on the investment potential, risks, and regulatory compliance associated with virtual assets.
4. Managing Portfolio of Virtual Assets: The management of a portfolio of virtual assets on behalf of clients, which involves making investment decisions, executing transactions, and managing the overall performance and risk of the portfolio.
5. Virtual Asset Broker: An intermediary who facilitates the buying and selling of virtual assets between parties. This includes executing orders, providing market insights, and ensuring compliance with regulatory requirements.
6. Virtual Asset Dealer: An entity that buys and sells virtual assets for its own account. This involves holding inventory of virtual assets, providing liquidity to the market, and engaging in proprietary trading activities.

3. Technology Governance and Controls:

1. Entities must maintain robust technology systems and security measures, including multi-layered security protections, encrypted keys, and secure wallet storage.
2. Regular internal and third-party audits are required to ensure compliance and security.

4. Operational Requirements:

1. VASP must ensure business continuity, disaster recovery, and compliance with AML/CFT regulations.
2. Clear policies for system maintenance, handling of planned and unplanned outages, and personnel management are mandatory.

5. Consumer Protection and Risk Disclosure:

1. All material risks associated with VAs must be disclosed to clients before transactions.
2. Continuous updates on risk disclosures are required to reflect market changes and new risks.

6. Market Integrity and Reporting:

1. VASP must implement measures to prevent market abuse, report transactions in real-time, and ensure transparency in trading activities.
2. Regular reports to the SCA on trading activities and adherence to anti-market abuse provisions are required.

Steps to Apply for an SCA License:

1. Preparation:

1. Review and understand the SCA guidelines and relevant Rulebook modules.
2. Ensure that your entity meets the capital and operational requirements.

2. Documentation:

1. Prepare necessary documentation, including business plans, technology governance policies, AML/CFT compliance procedures, and risk disclosure statements.
2. Ensure that all internal systems and controls are in place and documented.

3. Application Submission:

1. Submit application to the SCA, including all required documents and evidence of compliance with the guidelines.
2. Consider appointing lawyers/compliance consultants to assist with the application process.

4. Ongoing Compliance:

1. Once licensed, ensure continuous compliance with the SCA regulations and guidelines.
2. Regularly review and update internal policies and systems to adapt to regulatory changes and market developments.

To apply for an SCA license as a VASP in the UAE, your entity must comply with stringent regulatory requirements and demonstrate robust operational and technological controls.

HOW CAN CRYPTOVERSE HELP YOU?

As the leading legal advisory firm for Blockchain, Web3, and Crypto startups in the UAE, we provide unmatched professional legal advice to navigate the evolving regulatory landscape of digital assets and the licensing process of VASPs in the UAE. From legal structuring, company registration to handling intricate legalities of token launch, NFTs and tokenization, our dedicated team ensures your ventures thrive without any regulatory issues. Dive deeper into how we can empower your blockchain ambitions.