Business Technology

UAE revokes FTX license amid the exchange collapse

Dubai authorities have stated that no customers were put at risk because FTX MENA is still in the pre-approval stage.

Dubai authorities have stated that no customers were put at risk because FTX MENA is still in the pre-approval stage.

The Dubai Virtual Assets Regulatory Authority (VARA) has revoked the licence that would have allowed FTX to begin preparing to serve the local market. At the same time, the FTX scandal continues to make waves in the cryptocurrency industry and beyond.

According to a statement published on the agency’s website, VARA has rescinded its endorsement of FTX MENA’s Minimum Viable Product (MVP). VARA verified that FTX MENA’s licence was suspended before any client exposure due to the bankruptcy filing of FTX-related firms, including FTX exchange and Alameda Research.

The authority claimed that FTX MENA was still in the planning stages. The regulatory body clarified that the company lacked the requisite permissions to launch its operations and accept new customers. The agency also noted that the company lacked a local bank account, a prerequisite for providing virtual asset services in the United Arab Emirates.

The regulator has also requested disclosures from VASPs collaborating with VARA to enter the local virtual asset ecosystem. The authority can then determine the extent of the UAE-wide spread and domestic market exposure.

The first digital asset licence in Dubai was awarded to FTX in March, as previously reported by former CEO Sam Bankman-Fried. The FTX exchange received permission in July to begin testing and preparations as part of the MVP initiative.

As a result of the March 9th issuance of a new law in Dubai that established a regulatory framework for cryptocurrencies, VARA was born. The regulatory body’s responsibility includes establishing norms for corporate behaviour and safeguarding investor funds.

Bankman-Fried, meantime, will be speaking at a New York Times-hosted conference despite the storm that the collapse of the FTX exchange has brought upon the cryptocurrency industry. Members of the cryptocurrency community reacted negatively, with some condemning law enforcement and drawing parallels between Bankman-Fried and Alexey Pertsev, the arrested creator of Tornado Cash.