UAE financial supervision is considering the adoption of cryptocurrency turnover control rules.
According to the regulator of the International Financial Center Abu Dhabi, the introduction of cryptocurrency exchange rules is possible in the near future. This suggests that the authorities of the United Arab Emirates may allow the trading of cryptocurrencies such as bitcoin.
The State Financial Services Market Regulatory Commission (FSRA) is considering whether to establish rules for the exchange of cryptocurrencies.
“On the issue of adopting such rules, the FSRA intends to consult and work closely with industry players and relevant professional bodies,” representatives of the regulator said.
Previously, regulators in the UAE were skeptical about the exchange of cryptocurrencies, but did not directly limit it.
Last September, the Dubai Financial Supervisory Authority, which oversees the activities of the International Financial Center in Dubai, warned investors that they should be careful when exchanging, as such relationships are not regulated in any way.
In October, the UAE central bank announced that it would not recognize bitcoin as official currency, citing the risk that it would be used for money laundering and terrorist financing, and last week the UAE Securities Regulator warned the public about the risks of using digital tokens.
The FSRA statement, however, suggested that regulators could make a positive decision regarding cryptocurrencies, at least within the framework of the ADGM financial center.
“FSRA notes that cryptocurrencies, although they are not legal tender, attract attention around the world as a means of exchanging goods and services,” representatives of the regulator said.
In other Gulf countries, many regulators fear cryptocurrencies. The Central Bank of Saudi Arabia recommended that citizens not engage in bitcoin trading, and last week the Central Bank of Qatar informed banks that it had nothing to do with cryptocurrency.
However, Bahrain, which competes with the UAE for the right to be a financial services center, is considering exchanging cryptocurrencies and has created a “regulator sandbox” in which companies can test cryptocurrency technology and other financial innovations without any special restrictions.
According to Andrey Panferov, senior consultant at Davidson & Co law firm, cryptocurrency and operations with it, including the exchange of such currency and its use as a payment method, are not regulated at the legislative level in the UAE. Accordingly, in case of any contentious situations, it will be difficult to protect the interests of the injured party through official instances.
