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Dubai has banned the issuance of anonymous cryptocurrencies such as Monero (XMR) and all activities related to them under a new law published on Tuesday.
The United Arab Emirates (UAE) competent authorities have published the long-awaited cryptocurrency regulation that sets out licensing and authorization requirements for virtual asset companies and issuers looking to operate in Dubai.
The new rules define cryptocurrencies, which offer increased anonymity, as “a distributed public ledger that prevents tracing of transactions and ownership records, [Virtual Asset Service Provider] There are no mitigation techniques or mechanisms that allow for traceability or attribution of ownership.”
Regulators in other jurisdictions, such as Japan, have also taken steps to ban cryptocurrencies that enhance privacy, while the European Union is also considering banning tokens that hinder traceability.
“Opacity in the flow of funds makes it harder to detect illicit activity, so it's no surprise that regulators are reacting strongly to these types of asset classes and structures,” said Angela Ang, senior policy adviser at blockchain intelligence firm TRM Labs.
Crypto activity in Dubai is overseen by the Virtual Asset Regulatory Authority (VARA), which was established last year. The emirate has been working to attract crypto and blockchain companies to the city.
read more: Dubai sets regulatory requirements, mandates licenses for cryptocurrency companies
Update (February 8, 10:33 UTC): Adding comment from Angela Ang:
Correction (February 8, 16:08 UTC): Removed mention of Zcash from headline and first paragraph. It is unclear whether Zcash will be affected, as regulators have made exceptions to the mitigation features, which could theoretically include an “unshielding” option for Zcash.
