According to Dubai officials, the subsidiary’s operations will serve as a regulatory trial for future commercial services using virtual assets.
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On Friday, FZE, a subsidiary of crypto exchange FTX, was awarded Dubai’s first Minimal Viable Product (MVP) license, allowing full operation of the exchange in the region.
Dubai’s Virtual Asset Regulatory Authority (VARA) issued the operating license to FZE under the MVP program, which according to Helal Saeed Almarri, the director general of Dubai WTC Authority, is designed for secure and sustainable growth in Dubai. For now, the FTX FZE exchange’s operations are in the test phase and will be focused on providing various crypto services.
According to FTX CEO Sam Bankman-Fried, the newly licensed exchange will operate under a model incorporating regulatory oversight and Financial Action Task Force (FATF) compliance controls catering to Tier 1 international financial markets. In addition, Almarri revealed that the exchange’s operations will be used as a regulatory trial for future commercial services using virtual assets.
“The MVP Phase, exclusive to select, responsible international players like FTX, will allow VARA to prudently structure guidelines and risk mitigation levers for secure commercial operations,” said Almarri highlighting the region’s willingness for extensive crypto adoption.
With the license, FTX FZE has been approved to deploy regulated crypto derivatives products and trading services to qualified institutional investors. In addition, the exchange can also act as a clearing house, operate a nonfungible token (NFT) marketplace, and provide custodial services across the region.
Back in March 2022, FTX was the first to receive Dubai’s virtual asset exchange (VAX) license soon after the regulators signed off the virtual assets law and established the Dubai VARA. Crypto exchange OKX also received a provisional license from Dubai’s regulatory authorities to provide additional services to local investors and financial services providers.
Dubai, and the rest of the UAE, have been taking steps towards cryptocurrency adoption at a fast pace this year. The emirates went a step further on its bet for innovation earlier this year with the launch of Dubai Metaverse Strategy.
The interest of financial authorities on cryptocurrencies and the approbation of major exchanges is setting the tone for regulators across the world. While certain countries are focused on tightening controls, the experimental approach of Dubai and the green light recently given to the European Union Markets in Crypto Assets proposal could serve as a reference for other regions.