Blockchain and Bitcoin are the buzzwords for the United Arab Emirates public, too, like any other part of the world. Ever since Satoshi Nakamoto started the Bitcoin revolution in 2008, people have been wondering what it is and how it will work in the future. The price of Bitcoin has magically appreciated over the last many years. Now, with one of the first-ever cryptocurrency companies operating from Dubai, it is clear that UAE cryptocurrency is also becoming a solid part of the global crypto trend.
UAE had launched its blockchain Strategy in 2021, based on which about 50% of all the government transactions may be conducted through blockchain secured networks. Kavan Choksi UAE also points out that many regulations related to crypto-based assets are lately being released in UAE. Let us explore.
- FSRA (Financial Services Regulatory Authority) is the primary regulator of Abu Dhabi Global Markets. The Abu Dhabi free zone has become the first in UAE to issue regulations and guidance on carrying out cryptocurrency-related activities. FSRA has issued supplementary guidance based on the regulations of the token offerings.
Based on these guidelines, FSRA will determine case by case as to whether any coin token proposed is to be considered as a commodity or security. If the token is categorized as security, then the ICO will be based on the Financial Services and Market Regulations. On the other hand, ICO will be unregulated by considering it as a commodity.
- Similarly, the Dubai Multi Commodities Centre (DMCC) also introduced regulatory activities called “proprietary trading in crypto-commodities,” in which DMCC considered cryptocurrency under the category of commodities. The exchange houses or establishments which conduct ICOs are not covered under the DMCC licensing yet. The businesses licensed by DMCC will only be able to do tracing on their behalf.
As there are uncertainties among various market players, the UAE Central Bank Governor also published an interim statement by clarifying that these regulations may not be applicable to cryptocurrencies, crypto technology, and crypto exchanges. issued in due course. This statement can be considered as the right step in the right direction.
UAE crypto market
Even though there are limited regulations and uncertainties, many entities in the UAE have already incorporated blockchain in their operations. For example, UAE Exchange, a leading forex house, partnered with Ripple, which is San Francisco-based, to establish real-time international payments using their blockchain technology. By cutting off the need for any third-party forex handlers, UAE Exchange now manages to cut a lot in terms of their administrative costs.
Kavan Choksi UAE also observes a steady rise in cryptocurrency exchanges in UAE like BitOasis, offering several services to UAE investors. BitOasis now operates as an entity based on the British Virgin Islands. The ADGM regulations are expected to be clearer and more functional in the future, and by that time, it is anticipated that there will be steady growth in licensed exchange houses operating in UAE for crypto trading.