SCA issues a resolution on regulating the operator of the virtual asset platform

The Securities and Commodities Authority (SCA) has issued a decision regarding the regulation of the virtual asset platform operator.

The decision, issued by the Chairman of the Board of Directors of the Authority, Mohammed Ali Al Shorafa Al Hammadi, explained that its provisions will apply to the regulation of the virtual asset platform operator in the country.

The resolution defined the operator of the virtual assets platform as the legal person licensed by the Authority to regulate dealing in virtual assets through the virtual assets platform.

The resolution indicated that virtual assets are a digital representation of value that can be traded or digitally converted, can be used for investment purposes, and does not include digital representations of paper currencies, securities or other funds.

He stressed that the virtual asset may not be traded in the country until it is accepted in the official list of virtual assets of the virtual asset platform operator licensed by the authority and/or the competent authority and the virtual asset is registered with the authority.

The VAP operator shall undertake all tasks associated with the operation of the platform and the activities of the VSPs, in which case shall comply with all obligations of the VSPs specified in the Financial Activities Rules Booklet.

The operator of the virtual asset platform may only operate the platform without practicing any of the activities of other virtual asset service providers, and in this case he shall abide by the obligations of the virtual asset platform operator contained in the resolution, and the operator shall also register the virtual asset accepted by him in the official list with the Authority before starting trading it in accordance with the form prepared for this by the Authority.

The platform operator may also collect the fees he deems appropriate related to virtual assets, and the membership of his virtual asset service providers, and the Authority may control the fees to ensure their proper application, and may oblige the platform operator to amend these fees in the cases that require it.

The resolution stipulates that the platform operator must commit upon licensing and continuously after licensing to operational efficiency and flexibility by providing effective electronic programs and systems subject to regular review and development to monitor trades and transactions taking place in the virtual asset platform, maintaining the final record of ownership related to the virtual asset through an electronic or digital network or database, and refraining from issuing paper or written ownership certificates used for trading purposes.

The platform operator is also required to provide flexible and robust electronic programs and systems to ensure business continuity and disaster recovery commensurate with the nature, size and complexity of its operations, and to ensure that it continues to meet its obligations and regulatory and legal requirements, in addition to subjecting electronic systems and programs to stress tests and working to correct errors or weaknesses that are identified, and to make DEWA's errors with these tests and corrective actions if they are material.

The platform operator is also obligated to take appropriate measures to ensure the flexibility of IT systems and not to be credited, and to indicate their ability in the event of failure to continue working and protect information from damage, tampering, misuse or unauthorized access, and from the integrity of data that forms part of IT systems or is processed through them, as well as providing a regular review and continuous challenges to IT systems and controls commensurate with the nature, size and complexity of work through Adopt well-defined, clearly documented development and testing methodologies that comply with internationally accepted testing standards.

The platform operator must provide a risk assessment and management system in which he specifies the responsibilities for risk management, types of risks, the mechanism for measuring them and how to address them, including, for example: identifying all general, operational, legal and virtual asset platform operator risks wherever they appear in his activities, measuring and monitoring the different types of risks, distributing responsibility for risk management to persons with appropriate levels of knowledge and experience, providing sufficient and reliable information to key individuals and the Authority, and monitoring and following up transactions in its facilities.

According to the resolution, the platform operator is obligated to provide operational rules, including at a minimum the development and maintenance of operational business rules, and to provide adequate compliance procedures to ensure that the operational rules are subject to monitoring, enforcement, and prompt investigation of any complaints related to its operations or related to virtual asset service providers and other customers in its facilities, taking disciplinary measures and referring cases to the authority when necessary, conducting a public opinion poll regarding the operational rules for a sufficient period and taking into account the observations received from the public without prejudice. of the legislation in force.

The resolution stressed the importance of integrity, transparency and professional conduct, including providing a system that promotes and maintains high levels of integrity and transparency when carrying out its work that enables all customers to obtain the necessary information to understand the risks, fees and costs arranged using its services and facilities, ensuring that the necessary measures are taken to achieve the registration of activities and transactions, keeping records of activity and transactions for at least 10 years, protecting the applicable data and the requirements arranged therein, and refraining from using any information or procedures related to the asset platform. Default except to operate it, and not to use it or any of its employees for that platform to achieve any special benefit.

The operator of the virtual platform is also committed to protecting and preserving virtual assets, regulating trading by establishing rules and procedures for the fair, orderly and efficient operation of trading, and regulating access to services for permitted persons in accordance with legislation, operational rules and instructions.

The SCA shall have the right to request the provision of any documents or data from the operator of the virtual asset platform, provided that it is committed to providing them within the period specified by the Authority, and the Authority shall also supervise, investigate, control and inspect the platform and the operator and everything related to them with the same powers prescribed on the markets.