United Arab Emirates crypto legal chronicle

Comment by: Irina Heaver, Bitcoin and crypto lawyer

In the year 2024 is shaping up to be one of the most transformative times in the global crypto regulatory landscape. As crypto assets steadily move into mainstream finance, policymakers around the world are increasing comprehensive regulations.

With the US President-elect pledging a strategic Bitcoin (BTC) reserve over the EU's Strict Markets in Crypto-Assets (MiCA) directive, regulators have made one message clear: We're from the government, and we're here to help regulate!

For the UAE, 2024 marked a milestone. With five regulators now overseeing virtual asset service providers (VASPs), the country has introduced a series of laws, licensing frameworks and tax exemptions.

First, a global perspective

President-elect Donald Trump's plan to establish a strategic bitcoin reserve in the United States has fueled excitement and debate, but now six other international nations are reportedly looking to emulate the US, including Russia, Japan and Thailand. Such a bold move indicates that high-level governments are now considering strategic holdings of Bitcoin rather than extreme experiments.

On the other side of the Atlantic, the EU's MCA regulation scrapped unregulated stablecoins ahead of the regulatory deadline, forcing some to overvalue crypto exchanges by pushing USDt (USDT), one of the world's least correlated markets. Tether doesn't seem to be shedding any tears in the corner. Despite the EU regulatory upheaval, it continues to grow its market share.

The regulatory landscape of the United Arab Emirates

The UAE has no shortage of regulatory bodies shaping the crypto sector. Five regulators are now available to companies looking for virtual property services, allowing businesses to tailor their offerings to the most appropriate legal environment. Regulatory arbitration in the UAE is a feature, not a bug, but this feature must be navigated wisely, keeping in mind the general federal laws.

The highlight of the year was the introduction of the Central Bank of the United Arab Emirates (CBAE) Regulation of Payment Token Services in Circular No. 2/2024 in June 2024. Additionally, after a 12-month grace period, businesses in the UAE will be allowed to accept crypto payments in dirham-backed stablecoins through entities approved by the CBUAE.

Similarly, the Abu Dhabi Global Market (ADGM) introduced a regulatory framework specifically for fiat coins or “fiat-referenced tokens”. According to these rules, issuers must fully back their tokens with reserves, maintain strong governance and ensure transparency.

Latest: Crypto Trends Shaping Middle East's Blockchain Future

Meanwhile, a tax development from the Federal Tax Authority has proposed that all cryptocurrency transactions will be exempt from Value Added Tax (VAT) from November 15, 2024 to January 1, 2018. This tax relief is only relevant to those who conduct multiple transactions on central UAE exchanges and are subject to VAT on exchange payments. So, please ignore misleading tweets claiming that UAE has exempted all virtual assets from tax. That is not the case.

The Dubai International Financial Center (DIFC) has approved Digital Assets Act No. 2 by 2024. English common law principles recognize digital assets as property and treat tokens as tangible property.

Court proceedings and media misinterpretations

In a landmark court ruling, a Dubai court has approved an employment contract that stipulates that employee bonuses, such as an annual ticket home or school, can be paid in the company's native crypto token, in addition to other typical bonuses offered to employees in the UAE. Children's allowance.

Some international media have reported that salaries can now be paid entirely in Bitcoin and crypto, such interpretations read the decision in the wrong way. The judgment did not re-define the wage laws; Crypto tokens are recognized as a valid form of bonus payment in certain employment contracts.

As usual, he urged the public to rely on official government sources for accurate information rather than sensationalist social media posts.

Strengthen marketing guidelines

In the field of trading, the Virtual Assets Regulatory Authority has introduced strict rules that apply not only to the Emirate of Dubai, but to the entire UAE. Influencers and businesses promoting digital assets should include clear risk warnings, refrain from guaranteeing returns, and operate within a licensed framework.

Marketing at events is also intensifying. Violators will be fined up to 10 million dirhams, which is more than 2 million dollars. This move is implemented in close collaboration with the Federal Commodities and Commodities Authority (SCA) to demonstrate the integrated regulatory ecosystem that the UAE is building.

Licenses, cooperation and market participants

Regulatory transparency has gravitas, and in By 2024, it has attracted significant market players to the UAE. Heavyweights such as Binance, Crypto.com, OKX and Bybit have received VASP licenses, expanding their range of services, from exchanges and credit to derivatives trading.

Ripple has received in-principle approval from the Dubai Financial Services Authority at the DIFC. Meanwhile, in ADGM, well-known companies such as Blockdaemon, Circle, Paxos and eToro, attracted by the region's openness and business-friendly climate, have either significantly expanded or relocated. Tether's USDt is listed as an accepted token in ADGM.

Dubai's DMCC Crypto Center has welcomed many newcomers who have relocated their headquarters to the region's most vibrant crypto ecosystem.

Looking ahead

In the year By the end of 2024, the shape of the future is becoming more visible. In the US, all eyes are on the upcoming Bitcoin strategic reserve. Europe's MCA framework could be further strengthened, forcing more companies out of the EU.

In the UAE, the trend is toward tokenization, stablecoins, and decentralized financial platforms with more micro-regulations. However, the UAE is expected to attract more international players despite its strict regulations.

Buckle up… No, Lawyer is done for 2025. Expect stronger anti-money laundering laws, more defined stablecoin management and deeper cross-border regulatory cooperation.

Irina Hever is a leading Bitcoin and crypto lawyer in the UAE and Switzerland, internationally recognized for her vast experience and technical expertise. She holds a Juris Doctorate from Monash University and a Master of Laws in International Tax and Energy Laws from the University of Melbourne with an advanced specialization in AI and Blockchain technologies.

This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.