UAE CRYPTO TRAVEL RULE: COMPLIANCE, LATEST UPDATES & FUTURE OUTLOOK

01 May 2025

Mustafa Salaheldin Eltahir

The UAE’s implementation of the FATF-mandated Travel Rule under Federal Decree-Law No. 20/2018, Cabinet Decision No. 10/2019 and Resolution No. 24/2022 ensures that Virtual Asset Service Providers (VASPs) collect, verify and share originator and beneficiary data on every transaction. This client alert breaks down your obligations, recent regulatory tweaks and what lies ahead for crypto businesses in the Emirates.

1. Core Travel Rule Obligations

• Data Collection & Verification:

VASPs must capture sender/recipient names, account details, wallet addresses and transaction amounts.

• Secure Transmission: Transmit this information to counterparty VASPs via encrypted channels.

• Record Retention: Store all Travel-Rule data for at least five years.

• Ongoing Due Diligence: Screen originators and beneficiaries against UAE-mandated AML/CFT lists.

2. Jurisdictional Nuances

3. Recent Regulatory Highlights

·       CBUAE Payment Token Services Regime: Only dirham-pegged stablecoins permitted; all algorithmic tokens banned.

·       VARA Marketing Rulebook: Limits unlicensed promotions, including educational content.

·       SCA + VARA Joint Framework: Harmonized federal/free-zone crypto rules for smoother cross-jurisdiction operations.

·       DFSA Crypto Token Amendments (June 2024): Toughened token admission criteria, custody safeguards and AML/CTF controls.

4. Operational Challenges

·       Divergent Standards: Licensing and Travel-Rule thresholds vary—misalignment risks non-compliance

·       High Compliance Costs: Tech upgrades, staff training and secure messaging infrastructure demand significant investment.

·       Evolving Ruleset: New stablecoin and marketing restrictions require constant policy updates.

5. What’s Next in UAE Crypto Regulation

·       Specialized Licenses: Expect activity-specific regimes (e.g., DeFi, tokenized assets).

·       New Rulebooks & Guidance: Additional FATF-aligned modules for staking, lending and cross-border remittances.

·       ESG & Crypto: Future guidelines linking token issuers to environmental and governance disclosures.

·       CBDC Integration: Pilot frameworks for Dirham digital-currency interoperability with private tokens.

Conclusion

The UAE’s stringent Travel Rule regime underpins its position as a leading—and compliant—crypto hub. By mastering data obligations, anticipating new rulebooks and partnering with seasoned counsel, your VASP can thrive in 2025 and beyond.

ALKETBI TOUCH

Our team can guide you as a VASP through every step: (a) Crafting Travel-Rule policies and secure-messaging protocols (b) Aligning multi-jurisdictional thresholds and data-format requirements (c) Designing end-to-end AML/KYC and sanctions-screening frameworks (d) Liaising with regulators on reporting, audits and system-testing exercises. Contact us and our Virtual Assets team will ensure you are Travel-Rule compliant and that you stay ahead of the next wave of UAE crypto regulations.