SCA Decision No. 26/RM of 2023: Virtual Assets Platform Operators

The 2023 decision applied to virtual assets platform operators in the State. It defined a virtual assets platform operator as the legal person licensed by the Securities and Commodities Authority to regulate virtual asset transactions through a virtual assets platform. A platform was framed as infrastructure for listing, trading, transferring ownership, clearing and settling virtual assets, and storing related information through distributed ledger technology or similar technology.

Article 3 created an important listing control: a virtual asset could not be traded in the UAE unless it was accepted on the official list of a licensed platform operator and registered with the Authority. Article 4 then required the operator to register each accepted virtual asset with the Authority before trading commenced and allowed the Authority to oversee platform and VASP membership fees.

• Systems and operational resilience: operators had to maintain effective electronic systems, business-continuity and disaster-recovery arrangements, stress testing, IT controls, and risk-management processes.
• Operational rules: operators had to set rules for membership, accepted assets, defaults, investor access, AML/CFT compliance, disciplinary procedures, dispute settlement, public availability, consultation, and filing with the Authority.
• Transparency and records: operators had to provide information about risks, fees and costs; record activities, transactions and orders; keep transaction records for at least 10 years; protect data; and disclose required information to the Authority.
• Client asset protection: operators had to segregate their own money and virtual assets from customers’ money and virtual assets, provide safe custody and transfer procedures, identify customers and beneficiaries, and reconcile accounts.
• Trading controls: operators had to establish fair and orderly trading rules, pre- and post-trade information, suspension and cancellation mechanisms, short-selling and lending controls, error policies, clearing and settlement arrangements, and access controls.

SCA Decision No. 26/RM of 2023 was issued under the wider framework created by Cabinet Resolution No. 111 of 2022, which regulated virtual assets and VASPs in the UAE, including free zones, while excluding financial free zones, certain digital securities and commodity contracts, and payment-purpose virtual assets within Central Bank competence. Cabinet Resolution No. 111 also identified SCA-licensed activities such as VA platform operation, VA exchange services, transfer services, brokerage, and custody.

Cabinet Resolution No. 99 of 2024 later added a table of violations and administrative penalties for breaches of Cabinet Resolution No. 111 and its implementing instruments, including specific references to VAPO obligations under SCA Decision No. 26/RM of 2023.