Legal experts say UAE regulators are clearing the way for cryptocurrency and blockchain adoption

Time:2022-01-11 Source: 707 views Trending Copy share

Legal expert Kokila Alagh shares insights on cryptocurrency and blockchain regulations in the United Arab Emirates.

While many countries tend to simply ban crypto assets like Bitcoin (BTC), regulators in the United Arab Emirates are taking a different approach.

The country has been constantly touting its vision to be the blockchain capital, publishing frameworks to guide cryptocurrency businesses on how to operate in accordance with the law.

The country’s jurisdiction is divided into home and free zones, where the home regulator is the Securities and Commodities Authority (SCA), and free zones are specific geographic areas within the UAE that have a relaxed tax and regulatory regime.

Such free zones include the Dubai International Financial Centre (DIFC), which is regulated by the Dubai Financial Services Authority (DFSA), the Abu Dhabi Global Market (ADGM), which is regulated by the Financial Services Regulatory Authority (FSRA), and the Dubai Multinational Market, which is regulated by the SCA. Kinds of Commodities Center (DMCC).

In an interview with Cointelegraph, Kokila Alagh, founder and CEO of Karm Legal Consulting, shared a brief overview of the regulatory landscape in the country. According to Alagh, the SCA, the continental regulator, provides certainty and opportunity for cryptocurrency and blockchain businesses:

“These regulations provide certainty and open up new opportunities in the UAE, making the SCA a progressive regulator globally as they have not overlooked this important growth sector and are continually working to develop frameworks to meet these Emerging sectors like DLT, blockchain adjust.”

ADGM’s financial services regulator, the FSRA, was the first to introduce digital asset regulations in the country back in 2018. ADGM was also one of the first regulators in the world to introduce digital securities regulations and guidelines for digital assets, Alagh said, adding that ADGM is “one of the premier jurisdictions for established blockchain companies.”

Alagh also discussed DIFC regulations. According to Alagh, the DIFC’s regulator, the DFSA, “was one of the first regulators from a major financial free zone to bring regulations on security tokens”.

Current DFSA regulations cover the tokenization of securities through blockchain and distributed ledger technology, including the tokenization of stocks, derivatives, bonds, claims, certificates or fund units. However, consultation papers on stablecoins, fungible tokens and non-fungible tokens are still being drafted.

Finally, Alagh mentioned DMCC. The free zone has issued special licenses such as DLT technology service provider license and crypto commodity proprietary trading license. It also has a cryptocurrency-only center called Crypto Oasis, where more than 130 blockchain companies have registered.

Alagh said, “The DMCC is one of the most advanced regulators in the field and has pioneered the development of the cryptocurrency ecosystem in the UAE. The DMCC is a cryptocurrency-friendly regulator that provides businesses with a friendly startup framework.”

Meanwhile, cryptocurrency exchange Binance has embarked on a partnership with the UAE government to assist cryptocurrency exchanges and businesses in obtaining licenses in Dubai. The company signed a memorandum of understanding with the Dubai World Trade Centre Authority to launch a crypto hub in Dubai.

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