Part 4
Article (5): License Categories
1. A Person that intends to provide Payment Token Services shall as appropriate apply for one or more of the following categories of License:
a) Dirham Payment Token Issuer; b) Payment Token Custodian and Transferor; and c) Payment Token Conversion. 2. A Person not incorporated and located in the UAE may apply for a Foreign Payment Token Issuer Registration. For the avoidance of doubt, this includes a Person located in a Financial Free Zone. Article (6): License Conditions
1.
To be granted a License, an Applicant shall, at the time of submitting an Application:
a)
fulfil the legal form requirement as set out in Article (74) of the Central Bank Law;
b)
meet the respective initial capital requirements specified in Article (13) to (15); and
c)
provide the necessary documents and information specified in the Central Bank application form as provided by the Licensing Division.
2.
The Applicant must be a company incorporated in the UAE, including free zones but excluding Financial Free Zones
3.
An Applicant must meet, or demonstrate that it will meet upon License issuance, the ongoing requirements set out in Article (12) to Article (36), to the extent applicable to the License category for which it has applied, in particular:
a)
The requirements regarding regulatory capital as set out in Article (13) to Article (15). The Central Bank may add additional requirements regarding regulatory capital or increase the existing ones as a condition for License issuance, where it considers such additional requirements necessary;
b)
The requirements regarding corporate governance, general risk management and internal control, and accounting system as set out in Article (34). In particular, the Board, the Senior Management, and the Controller(s) must have been approved by the Central Bank as fit and proper in the context of the Application before the License is granted;
c)
The requirements regarding risk management policies and procedures for the management and protection of the Reserve of Assets, as set out in Article (22);
d)
The requirements regarding technology and specific risk management policies and procedures for managing the risks arising from the operation of the Payment Token business, as set out in Article (34) and Article (35);
e)
The requirements regarding business conduct and Customer protection as set out in Article (25) to Article (32); and
f)
The requirements regarding anti-money laundering and countering the financing of terrorism, as set out in Article (24).
4.
As part of the licensing process, separate face-to-face meetings between Central Bank staff and the Applicant’s and the Applicant’s Controllers’ Boards and the Senior Management may be conducted.
Independent assessments
5.
The Applicant is required to submit an independent assessment report not older than six (6) months assessing how it will comply with Article (6)3, covering at least the following key areas:
a)
capital requirements;
b)
corporate governance and risk management;
c)
Reserve of Assets management;
d)
technology risk management;
e)
payment security management;
f)
business continuity management;
g)
business conduct and Customer protection; and
h)
AML/CFT control systems.
6.
The Applicant must appoint one or more competent and qualified assessor(s), which are independent from the business units of the Applicant, to carry out the independent assessments. The assessors must not be involved in the operations to be reviewed or in selecting or implementing the relevant control measures to be reviewed, must have relevant knowledge and experience, and must be able to report their findings independently. They must also confirm to the Central Bank that there is no conflict of interest in the conduct of independent assessments.
7.
An Applicant for Payment Token Issuing shall, at the time of submitting an Application, provide a list of all Payment Tokens that it intends to issue. The Central Bank may require that the Applicant obtain a legal opinion for all Payment Tokens assessing whether the Payment Tokens and the operations of the Payment Token Issuer comply with Central Bank regulations including but not limited to whether the White Paper is accurate and the Reserve of Assets is properly held.
Article (7): Licensing Procedure
1. The licensing of Applicants shall be subject to the procedure envisaged in the Central Bank’s licensing manual. Preliminary meeting with the Central Bank
2. Any Person that is interested in obtaining a License may obtain the Application form from the Licensing Division of the Central Bank. 3. The Senior Management of the Applicant is strongly encouraged to meet and discuss the Applicant’s Payment Token business plan with the Central Bank before submitting a formal Application. Consultation with home regulator
4. Where a Controller of the Applicant is regulated by another authority, including by authorities in other jurisdictions, the Central Bank may contact the relevant authority about the Applicant to elicit the relevant authority’s views. Completing and submitting the Application
5. An Application must be lodged with the Central Bank with the completed form and the required documents and information set out in the Annex to this Regulation. Processing of Application
6. The Central Bank may seek any additional information it deems necessary from the Applicant to reach a decision on the Application. 7. Incomplete information may result in delays. Applicants should, therefore, pay attention to the following points:
a) All Applications must be submitted with documents and information listed in the Annex to this Regulation.; b) Where an Application received is incomplete or supporting documents or information is lacking, the Applicant will be informed in writing that the Application will be treated as “draft” and will be asked to complete the Application or provide the missing information by a date specified by the Central Bank.; c) Where information requested is not received by the specified date or a revised date agreed in writing by the Central Bank at the request of the Applicant, the Application may be treated as “suspended” and the Applicant will be notified of this in writing; d) Where an Application is “suspended”, the Applicant will be informed in writing that the processing of the Application will cease temporarily. Suspended Applications will be reactivated only when the outstanding information is submitted; and e) Where an Application is “suspended” for six (6) months or more for any reason, a new Application will be required if the Applicant wishes to pursue the matter further. Approval of Application
8. The Central Bank may approve an Application for a License made by an Applicant provided that all the licensing criteria are met by the Applicant. 9. The Central Bank may grant the License without conditions or subject to any conditions attached. Conditions attached to a License may include, among others:
a) imposing a higher capital or liquidity requirement; b) additional requirements relating to protection of the Reserve of Assets; and c) restrictions on the Payment Token business or any secondary or ancillary businesses, or as to the maximum volume or value of Payment Tokens which may be issued. 10. After the Central Bank has granted a License to an Applicant, the Central Bank will:
a) assign a unique reference number to the License; b) specify in the License the date on which the License has taken effect; and c) list the details in (a) and (b) in a publicly available register on its website. 11. A Licensee must ensure that the License reference number of the License assigned to it by the Central Bank is clearly displayed on the Licensee’s website and promotional materials. Article (8): Application for a Non-Objection to perform Payment Token Conversion or Foreign Payment Token Custody and Transfer
1.
A Virtual Assets Exchange Platform Operator may apply for a Non-Objection Registration in order to perform Payment Token Conversion.
2.
A Bank or Exchange House may apply for a Non-Objection Registration in order to perform Dirham Payment Token Conversion.
3.
A Person who is licensed by SCA or any Local Licensing Authority as a Virtual Assets Service Provider to provide custody services for Virtual Assets, may apply for a Non-Objection Registration to perform Payment Token Custody and Transfer of Foreign Payment Tokens. For the avoidance of doubt, any other Person seeking to perform Payment Token Custody and Transfer shall be required to obtain a Payment Token Custodian and Transferor license from the Central Bank.
4.
To be granted a Non-Objection Registration, an Applicant must provide details in its Application of its SCA or Local Licensing Authority licensing status, where applicable, and the nature and extent of its SCA-licensed or Local Licensing Authority licensed business.
5.
To be granted a Non-Objection Registration, an Applicant must demonstrate, in such manner as the Licensing Division may direct, that it will meet any conditions imposed by the Central Bank and the requirements listed in Article (8)10 or Article 8(11)
Non-Objection Registration process
6.
To be granted a Registration as a Payment Token Conversion Provider or Foreign Payment Token Custodian and Transferor, an Applicant shall, at the time of submitting an Application, provide the necessary documents and information specified in the Central Bank application form as provided by the Licensing Division.
7.
As part of the licensing process, separate face-to-face meetings between Central Bank staff and the Applicant’s and its Controllers’ Boards and Senior Management may be conducted.
8.
Article (7) shall apply to Applicants and Applications for Registration as a Payment Token Conversion Provider or Foreign Payment Token Custodian and Transferor, for which purposes:
a)
references to License, Licensee and licensing in that Article shall be construed as references to Non-Objection Registration, Registered Payment Token Conversion Provider and registration or Registered Foreign Payment Token Custodian and Transferor; and
b)
the Applicant shall only be required to provide such information and documents listed in the Annex as the Central Bank may specify.
9.
The Central Bank may contact SCA and any relevant Local Licensing Authority to obtain such information as the Central Bank considers relevant in relation to the Applicant, including in order to take into account:
a)
the relevant authority’s views in respect of matters such as the financial soundness and the overall internal control environment of the Applicant, and whether SCA or any relevant Local Licensing Authority has any concern about that Applicant extending its business to include Payment Token Conversion; and
b)
the relevant authority’s scope of and approach to regulation and supervision of the Applicant, in order to assist the Central Bank with determining which if any conditions or requirements of this Regulation (in addition to those listed in Article (7)9(c), Article (8)10 and Article (8)11, as applicable) the Central Bank will impose on the Applicant.
Application of this Regulation to Registered Payment Token Conversion Providers
10.
Without prejudice to the other provisions of this Article (8), a Registered Payment Token Conversion Provider which is a Virtual Assets Exchange Platform Operator shall comply with the following Articles of this Regulation:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
(xii)
Article (37); and
(xiii)
to the extent provided for in those Articles.
11.
Without prejudice to the other provisions of this Article (8) and without prejudice to the application of other laws and regulations, a Registered Payment Token Conversion Provider which is a Bank or Exchange House shall comply with the following Articles of this Regulation:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
(xii)
(xiii)
(xiv)
(xv)
(xvi)
Article (37); and
(xvii)
to the extent provided for in those Articles.
12.
The Central Bank may apply any other provision or requirement under this Regulation, not already applicable, to a Registered Payment Token Conversion Provider or Registered Foreign Payment
Token Custodian and Transferor if the Central Bank determines it necessary to do so to achieve its statutory objectives.
Article (9): Foreign Payment Token Issuer Registration
1.
A Person incorporated outside the UAE (which for the purposes of this Regulation would include a Person incorporated in a Financial Free Zone) may apply for a Registration as a Foreign Payment Token Issuer.
Registration process
2.
To be granted a Registration as a Registered Foreign Payment Token Issuer, an Applicant shall, at the time of submitting an Application:
a)
provide the necessary documents and information specified in the Central Bank application form as provided by the Licensing Division;
b)
obtain written evidence of the non-objection from SCA or a Local Licensing Authority for the Registration based on a joint framework between the relevant authorities; and
c)
demonstrate, in such a manner as the Licensing Division may direct, that it will meet any conditions which may be imposed by the Central Bank pursuant to Article (7)9(c) and the requirements listed in Article (9)7.
3.
As part of the registration process, separate face-to-face meetings between Central Bank staff and the Applicant’s and its Controllers’ Boards and Senior Management may be conducted.
4.
An Applicant for a Foreign Payment Token Issuer Registration shall, at the time of submitting an Application, provide a list of all Foreign Payment Tokens that it intends to issue and obtain a legal opinion on the assessment for all Foreign Payment Tokens. The legal opinion must assess whether the Foreign Payment Tokens and the operations of the Payment Token Issuer comply with this Regulation including but not limited to whether the White Paper is complete and accurate.
5.
Article (7) shall apply to Applicants and Applications for Registration as a Foreign Payment Token Issuer, for which purposes:
a)
references to License, Licensee and licensing in that Article shall be construed as references to Registration, Registered Foreign Payment Token Issuer and registration;
b)
Article (7)3, Article (7)4, and Article (7)9(a) shall not apply; and
c)
the Applicant shall only be required to provide such information and documents listed in the Annex as the Central Bank may specify.
6.
Where the Applicant is regulated by another authority, including by authorities in other jurisdictions, the Central Bank may contact the relevant authority about the Applicant. The Central Bank may take into account the relevant authority’s views in respect of matters such as the financial soundness and the overall internal control environment of the Applicant, and whether the relevant authority has any concern about that Applicant extending its Payment Token business to the UAE.
Application of this Regulation to Registered Foreign Payment Token Issuers
7.
Without prejudice to the remainder of this Article (9), a Registered Foreign Payment Token Issuer shall comply with the following Articles of this Regulation:
a)
b)
c)
d)
e)
f)
g)
h)
i)
Article (26); and
j)
to the extent provided for in those Articles.
8.
A Registered Foreign Payment Token Issuer shall:
a)
hold a reserve of the same value as the total value of Foreign Payment Tokens which that Foreign Payment Token Registree has issued, and denominated in the same currency as that of the Foreign Payment Tokens which that Foreign Payment Token Registree has issued;
b)
procure and publish regular audits of the reserve referred to in (a) by an External Auditor;
c)
at any time requested by the Central Bank, demonstrate that it holds Fiat Currency received from Customers for the issuance of Payment Tokens to equivalent standards of proper management and safekeeping as are set out in Article (22); and
d)
comply with all laws, regulations and guidance which apply to it in the jurisdiction of its incorporation and in any other jurisdiction in which it operates, including but not limited to AML/CFT laws and regulations.
Article (10): Suspension, Withdrawal and Revocation of License or Registration
1. The Central Bank may suspend, withdraw or revoke a License or Registration as stipulated in the Central Bank Law. 2. Where a License or Registration is suspended, withdrawn or revoked, the Licensee or Registree must immediately cease to perform Payment Token Services.