UAE reprimands cryptocurrency firm OPNX

The United Arab Emirates’ Virtual Assets Regulatory Authority (VARA) announced on Tuesday a written reprimand to a cryptocurrency company. The UAE remains committed to cryptocurrency despite challenges in the sector.

VARA said the letter to Open Exchange (OPNX) dated April 12 was in response to “unregulated activity.” The firm allegedly carried out virtual asset exchange services on an “unregulated basis” in Dubai and marketed its services without the necessary permits from VARA, the authority said in a press release.

Open Exchange is a planned cryptocurrency exchange that purports to be the “world's most radically transparent derivatives exchange.” It plans a platform where transactions are public and able to be audited, per its website.

The company was created by the founders of the failed crypto hedge fund Three Arrows Capital, according to Bloomberg.

Why it matters: The UAE established VARA in 2022 as a regulatory framework for cryptocurrency and related technology. The Gulf state successfully attracted several crypto firms to Abu Dhabi and Dubai in the meantime, such as Crypto.com, Bybit and Kraken.

The 2022 cryptocurrency bubble crash hurt the UAE’s crypto scene. In February, Kraken announced it was closing its Abu Dhabi office. The Emirates also received bad press due to disgraced FTX founder Sam Bankman-Fried’s October 2022 trip to Dubai. FTX went bankrupt soon thereafter.

Emirati authorities are still bullish on crypto, however. Last month, UAE Trade Minister Thani bin Ahmed Al Zeyoudi told the Atlantic Council that the Gulf state still “wants to be one of the early introducers of this technology.”

The UAE’s Minister for Artificial Intelligence Omar Sultan Al Olama made similar comments at the World Economic Forum in January.

Cryptocurrency is continuing to develop in the UAE. On Monday, Dubai’s BitOasis announced that it received the first-ever “Minimum Viable Product” license from VARA. The license will allow BitOasis to provide broker-dealer services related to virtual assets, the company said in a press release.

Know more: The crackdown on OPNX comes as the UAE seeks to better deter financial misconduct in general. The Gulf state has been implicated in a variety of money laundering and sanctions-busting scandals in recent years. Most recently, British authorities announced in April they busted a $100 million money smuggling ring between Dubai and the United Kingdom.

The UAE’s first-ever corporate tax will come into effect next month.