Cryptocurrency laws and regulations in UAE

By Adil Shafi and Kajal Patel, Anjarwalla Collins & Haidermota
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The terms “Blockchain” or “Bitcoin” were alien to the general public in the United Arab Emirates (UAE) when Satoshi Nakamoto began the Bitcoin phenomenon in 2008. However, today with one of the world’s first cryptocurrency deep “cold storage” companies operating in Dubai, it is clear that tides have shifted and the UAE cryptocurrency is actively becoming part of this global trend.

Adil-Shafi-Partner-at-Anjarwalla-Collins-&-Haidermota
Adil Shafi
Partner at Anjarwalla Collins & Haidermota in Dubai
Tel: +971 4452 9091
Email: ashafi@ach-legal.com

Blockchain technology is a decentralized public or private ledger that records transactions between two or more parties. It is this key feature of “decentralization” that makes this technology particularly attractive to investors globally. In particular, Nakamoto took advantage of the features of blockchain technology to create the most well-known cryptocurrency, Bitcoin. Cryptocurrency is an encrypted digital currency that operates using blockchain technology. Unlike fiat currency, which is regulated by a single entity such as a central bank, cryptocurrencies are validated through a decentralized system whereby any party participating in the process can verify the transactions that take place.

Regulatory framework in UAE

In a bid to become a pioneer in blockchain technology, the UAE has launched the UAE Blockchain Strategy 2021, pursuant to which 50% of government transactions will be conducted using blockchain technology by 2021. To solidify its vision, regulations on the use of crypto assets, including cryptocurrencies, have recently been issued.

The Financial Services Regulatory Authority (FSRA) – which is the financial regulator of the Abu Dhabi Global Markets (ADGM), a free zone in Abu Dhabi – has become the first regulator in the UAE to issue comprehensive guidance and regulations on carrying out activities relating to cryptocurrencies. The FSRA issued supplementary guidance on the regulation of Initial Coin/Token Offerings and Virtual Currencies (under its Financial Services and Market Regulations), under which it commented on initial coin offerings (ICOs), whereby cryptocurrencies are offered for sale to the general public.

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ANJARWALLA COLLINS & HAIDERMOTA

Office W501A, Block C, Saaha Offices

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