Crypto business in the UAE - the legal framework

19 / 11 / 2020

If we consider the regulatory and legal system of the United Arab Emirates, we can clearly see that in recent years it has undergone significant changes and underwent modernization. Looking at the UAE legal system, it can be said that it is based on Sharia law, all legal codes and laws are based on the Criminal Code, Commercial and Civil Laws.

The United Arab Emirates consists of 7 Emirates, which support not only the general laws of the country  but have their own rules and laws in the area that are not enforced by the general federal law.

As for the crypto business in the UAE, it is regulated by the Central Bank of the United Arab Emirates. And the stock and financial markets are managed by a dedicated Securities and Commodities Authority.

As for the Free Economic Zones, each of which has its own regulatory and legal bodies that control investment flows and monitor compliance with all customs regulations, etc.

In the UAE, there are two separate independent jurisdictions (financial free zones), which have their own commercial law, which is separate from the rights of all the remaining zones of the UAE. These zones include the Dubai International Financial Center (DIFC) and the Abu Dhabi Financial Zone (ADGM). For these zones, the regulatory authority is the Financial Services Regulatory Authority of the Emirate in which they are located. The principles of English common law apply in both zones. Also, very closely monitors compliance with all rules and federal criminal law of the UAE, which is often aimed at combating and controlling money laundering.

As for the blockchain and its control, the UAE has established departments that control virtual currencies and transactions outside of special free financial zones. The use of virtual currencies is not prohibited throughout the UAE, but investors are always warned about the possible consequences of using crypto currencies.

In October 2019, draft regulations related to virtual assets were published. However, various laws and regulations governing cryptocurrencies are still being finalized, which in turn attracts foreign investors and those who manage virtual currency exchanges.