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UAE Starts to Accept Crypto License ApplicationsEarlier this week, the United Arab Emirates (UAE) announced that it has commenced the process of accepting license applications from crypto companies.©Pexels/Andrea PiacquadioThe announcement was made by the Middle Eastern country’s Securities and Commodities Authority (SCA) on Monday. The decision comes in the wake of last year’s UAE Council of Ministers opting to regulate the country’s crypto sector as per Decision №111.VASP approval processAs part of the process, virtual asset service providers (VASPs) are obliged to apply to the SCA for approval with those already licensed within the UAEs financial-free zones not required to undertake the process.When it comes to the individual Emirates of Dubai and Abu Dhabi, both have already implemented their own licensing process relative to crypto service providers. In the case of Dubai, it already has its Virtual Assets Regulatory Authority (VARA) and its procedures have been deemed to be unified with the process now being implemented by the UAE.The SCA suggested that the initiative offers the opportunity for crypto companies to “regularize their status.”Key rulesThe SCA has set out nine articles as part of the process it is asking crypto companies to apply for and sign up to. Article 3 stipulates that VASPs can only trade digital or virtual assets that have been accepted and approved within an official list of virtual assets.Article 4 sets out the tasks and responsibilities of the virtual assets platform operator. It considers the need for integrity, transparency and professional behavior. Service access must be organized through procedures that facilitate access only for permitted persons.Article 5 highlights the obligations of VASPs relative to seven areas. These include operational efficiency and flexibility, and the provision of operational rules. That incorporates the need for the setting and maintenance of operational business rules and meeting operational rules according to a predefined set of standards.The policy sets out the right of the SCA to request provision of documents and data from a VASP and their receipt within a specified time period.Jurisdictional arbitrageThe UAE and particularly its Abu Dhabi and Dubai emirates are demonstrating that they’re open for business where the digital assets sector is concerned. It’s one location that’s on the rise in terms of coming to global prominence in competing for crypto business alongside places like Singapore and Hong Kong.The Biden administration in the United States has shifted policy relative to digital assets to the down side. On Wednesday it emerged that leading US exchange Coinbase has received approval to operate in Bermuda. It’s being speculated that negotiations are also underway in Abu Dhabi to secure a license for the company to trade there.On the day in which Securities and Exchange Commission (SEC) Chair Gary Gensler received a harsh grilling in front of the House Financial Services Committee on Capitol Hill, Coinbase CEO Brian Armstrong confirmed that the company is prepared to move overseas if the regulatory environment doesn’t improve in the United States.Meanwhile, earlier on Thursday, the European Union officially passed its Markets in Crypto-Assets (MiCA) legislation in the European Parliament, providing clarity for the digital assets industry in Europe. In moving forward with crypto licensing, the UAE is jockeying for position among a field of global centers that are vying for crypto business while the US falls behind.

In the aftermath of a substantial security breach in November that resulted in a confirmed loss of over $48 million, Kyber Network, the multi-chain decentralized exchange (DEX) aggregator, has taken decisive steps to restructure its operations.Photo by kate.sade on UnsplashWorking towards recoveryCEO and co-founder Victor Tran posted a lengthy message on the X social media platform on Christmas Eve to announce a 50% reduction in the firm’s workforce. The move marks a pivotal moment in the company’s efforts to recover and rebuild. As part of its strategy to ensure sustainability, Kyber temporarily suspended its liquidity protocol initiatives and KyberAI. Despite these challenging measures, the core aggregator and limit order functions remain fully operational. Tran emphasized the company’s commitment to persist and evolve, highlighting its determination to navigate through recent adversities. Despite these challenging measures, the core aggregator and limit order functions remain fully operational. Tran emphasized the company’s commitment to persist and evolve, highlighting its determination to navigate through recent adversities. Zap API additionIn an effort to enhance its services, Kyber Network disclosed plans to introduce the Zap API. This new offering aims to provide decentralized applications, crypto wallets and other DeFi projects with a seamless means to connect their users to liquidity protocols. Tran also revealed that in an effort to support its workforce during the transition, the firm has established a “voluntary database” to assist departing employees in finding new career opportunities. This initiative seeks to connect these individuals with peer projects in the industry. Exploit fall-outKyber Network took to social media on Nov. 22 to advise its KyberSwap Elastic user base of a security incident. With that notification, it advised users to withdraw their funds immediately. Over the next few days, it became clear that $48 million had been exploited on the platform by a hacker. In the immediate aftermath of the incident, the hacker posted a message on the blockchain, stating: “Negotiations will start in a few hours when I am fully rested.” He/she progressed to issuing unusual demands, including gaining complete operational control of the company and temporary ownership of the KyberDAO governance mechanism. The nature of these demands sets this particular exploit apart from others. The Kyber team, however, chose to reject these demands. It chose to respond with a blockchain message of its own, outlining that it was cooperating with law enforcement in an effort to track the hacker. The company, which operates from offices in Hanoi, Ho Chi Minh City and Singapore, also offered the hacker a carrot of a 10% bounty if the hacker agreed to return 90% of users’ funds. Instead, the firm pledged to compensate affected users through the KyberSwap Elastic Exploit Treasury Grant Program. On Dec. 20, the firm provided further details on that grant program, outlining how affected users would be refunded. Furthermore, Kyber Network is actively collaborating with authorities to identify the hacker and recover the stolen funds.Earlier this month, blockchain security firm CertiK issued an alert on social media, outlining that the hacker had moved BNB tokens to the value of $338,000 into decentralized crypto tumbler Tornado Cash.

FTX Seeks Exclusion of Dubai Unit from Bankruptcy ProceedingsFailed crypto exchange FTX, which filed for bankruptcy in November, is now aiming to exclude its Dubai unit from the ongoing restructuring proceedings unfolding in the United States.Photo by Roman Logov on UnsplashNo previous business activityThe motion, filed with the bankruptcy court in Delaware on Wednesday, comes as FTX contends that its Dubai branch had not engaged in any business activities prior to the bankruptcy declaration, making its participation in the rehabilitation efforts unlikely.In the recent court filing on August 2, FTX put forth its argument that its Dubai unit, FTX Dubai, held a balance sheet that was solvent. Consequently, the exchange proposed that initiating a voluntary liquidation process in line with the laws of the United Arab Emirates (UAE) would expedite the distribution of its positive cash balance, settling liabilities, and liquidating assets.FTX Dubai, a wholly-owned subsidiary of FTX’s European arm, holds a sum of approximately $4.5 million across various accounts. However, $4 million of this amount remains restricted by the Virtual Assets Regulatory Authority (VARA) of Dubai, serving as a security measure for its license as a virtual asset service provider.Expired licensingFTX Dubai was originally awarded a license by VARA in July 2022, although it never got to a point where it offered any crypto-related services based on that license. On May 31 of this year, FTX Dubai management was informed by VARA that the regulator would not seek to renew the license if FTX Dubai didn’t act to terminate it. The license was subsequently suspended on July 12 by VARA.Licensing could have been useful to a new operator coming in to run the business. Earlier this week, the FTX Debtor filed a restructuring plan that leaves a path open towards relaunching the FTX International business outside of the United States. It’s clear that the current regulatory environment in the US is such that it’s simply not an attractive option to establish a restructured FTX business there.The FTX Debtor and its advisors are engaging with bidders for the business. In establishing a business on the right footing, it may be just as well that licensing will start afresh. To settle market doubts, the new entity will need to achieve a high level of compliance and industry-leading customer protections.FTX Dubai is now anticipated to collaborate with the designated liquidator to carry out essential administrative procedures, ensuring a systematic and efficient execution of the liquidation process. The company’s decision to file for bankruptcy on November 11, 2022, initiated bankruptcy proceedings for a total of 102 associated entities worldwide, reflecting the substantial impact of its financial turmoil.The matter is scheduled to be addressed in the court’s first hearing on August 23, shedding light on how the court will respond to FTX’s motion to remove its Dubai unit from the overarching bankruptcy proceedings in the US. This development underscores the complexities of a cross-border crypto bankruptcy, highlighting the intricacies of global regulatory frameworks in this evolving sector.