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UAE regulators pave way for crypto and blockchain adoption, says legal expert

UAE regulators pave way for crypto and blockchain adoption, says legal expert
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While many countries tend to ban the use of Bitcoin (BTC) and digital assets, regulators in the UAE are taking a different approach.

The country is constantly operationalizing its vision of becoming a blockchain capital by providing frameworks to guide crypto companies on how to operate in accordance with the laws.

Jurisdictions in the country are divided between the mainland, where the regulator is the Securities and Commodities Authority (SCA), and free zones – that is, geographically defined areas within the UAE with relaxed tax and regulatory regimes.

These free zones include the Dubai International Financial Center (DIFC), regulated by the Dubai Financial Services Authority (DFSA), Abu Dhabi Global Markets (ADGM), regulated by the Financial Services Regulatory Authority (FSRA), and Dubai. The Multiple Commodities Center (DMCC), which falls under the regulatory jurisdiction of the Securities and Commodities Authority.

In an interview with Cointelegraph, Kokila Alagh, founder and CEO of Karm Legal Consultants, shared a brief overview of the regulatory situation in the country. According to Alagh, SCA, the mainland regulator, provides certainty and opportunity for crypto and blockchain companies:

“Regulations have provided certainty and opened up new opportunities in the UAE, making the SCA a progressive regulator in the global scene, as they have not neglected this vital and growing sector and are constantly working on developing adaptive frameworks in accordance with such emerging sectors as DLT and blockchain.”

The FSRA, ADGM’s financial services regulator, was the first to introduce digital asset regulations in the country in 2018. Alagh said ADGM was also one of the first regulators globally to introduce digital securities regulations and guidance on digital assets, adding that ADGM is “ One of the most important jurisdictions for existing blockchain companies.”

Alaa also discussed regulations in the Dubai International Financial Centre. According to Alagh, the Dubai Financial Services Authority (DFSA), the regulator of the Dubai International Financial Center, “is one of the first regulators from a major financial free zone to establish regulations regarding security tokens.”

The current DFSA regulations cover the tokenization of securities through blockchain technology and distributed ledgers, including the tokenization of stocks, derivatives, bonds, bonds, certificates or fund units. However, consultation papers for stablecoins, exchangeable cryptocurrencies, and non-fungible tokens are still in the process of being drafted.

Related: Dubai World Trade Center Creates New Cryptocurrency Center and Becomes Regulator

Finally, Alaa referred to DMCC. The free zone issued special licenses, such as the license for a DLT technology service provider and proprietary trading in crypto-commodities. It also has a dedicated cryptocurrency hub called Crypto Oasis, where more than 130 blockchain companies are registered.

Alaa said that “DMCC is one of the most progressive regulators in this field and has led the development of the cryptocurrency ecosystem in the UAE. DMCC is a crypto-friendly regulator that provides companies with an easy framework for setting up businesses.”

Meanwhile, cryptocurrency exchange Binance has embarked on a collaboration with the UAE government to help cryptocurrency exchanges and companies obtain their licenses in Dubai. The company signed a Memorandum of Understanding with the Dubai World Trade Center Authority, where it launched a cryptocurrency hub.