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‘Crypto’ industry has been flourishing globally over the past several years. The UAE is presently considered to be one of the most promising countries in the world for cryptocurrency initiatives. With the objective of firmly establishing the UAE as a world leader in emerging areas, the UAE is boldly adopting cutting-edge innovations in their early stages. One such innovation is “Block chain and Cryptocurrency”. Cryptocurrencies are based on a technology known as block chain .

Although the rest of the world continues to be hesitant to embrace the technology, the government of the United Arab Emirates has begun using blockchain technology in its dealings. The Emirates Blockchain Strategy 2021, and the Dubai Blockchain Strategy were launched to help this effort. By 2021, the Emirate aims to be the first government in the world to abandon paper transactions entirely and undertake all of its digital transactions with the help of Blockchain technology.

The government of the United Arab Emirates is working to create its own cryptocurrency named as EmCash, which can be used to pay for school fees and government services as part of a payment system. This article will concentrate on the notion of cryptocurrency, as well as the legal framework and authorities that regulate it in the UAE.

  • What is crypto?

A crypto-asset is a digital asset that uses cryptographic techniques, peer-to-peer (p2p) computing, and digital ledger to regulate the formation of new units on a block chain, validate transactions, and secure such transactions without the need of an intermediary. Such transactions can take place 24/7 and in minutes all over the world.  Crypto-assets include cryptocurrencies, security tokens, and utility coins, among others. Some of these phrases can be used interchangeably. Cryptocurrency is a new kind of digital currency or decentralized money that is sometimes shortened as “crypto.” Cryptocurrency is decentralized, which means it is not controlled by a central authority such as a bank or government and is instead traded between individuals.

  • How does crypto currency works on block chain?

With the help of decentralized technology, cryptocurrencies allows users to make secure payments with other individual, and also allow them to deposit their money without the involvement of third party i.e. banks. They are based on the block chain, also referred as Distributed Ledger Technology (DLT), which is a digital ledger of transactions that keeps track of all transactions and is maintained by currency owners. Each block in the chain comprises a number of transactions, and whenever a new transaction happens on the block chain, a record of that transaction is recorded to the ledgers of every participants which cannot be deleted or altered with the help of digital signature called as hash. This feature of block chain technology assures that no one can hack into the system or change the information stored in the present block or previous blocks.

  • Regulatory authorities on Crypto assets in UAE

Before discussing about the regulatory framework it is important to understand the regulatory authorities which have the authority to carry out the activities relating to cryptocurrency in their specific zones.

The financial regulatory authorities in the UAE can be divided into two zones:

  1. Financial free zones which includes :
  2. Abu Dhabi Global Markets (“ADGM”) and
  3. Dubai International Financial Centre (“DIFC”)
  4. The rest of the UAE which includes onshore and non-financial free zones.  (“Onshore UAE”).
  • Regulators in Financial Free zones

The activities in the Financial Free zones are governed by their respective regulators, such as the Dubai Financial Services Authority (“DFSA”) in the DIFC, and the Financial Services Regulatory Authority (“FSRA”) in the ADGM. As a result, they will have complete control over how Cryptocurrency is to be classified and regulated.

  • Regulators in Onshore UAE

If cryptocurrencies are deemed to be a product such as metal or a security such as stock, they may fall under the jurisdiction of the UAE Securities and Commodities Authority (“SCA”), whereas if they are deemed to be a currency such as AED or USD, the UAE Central Bank (“Central Bank”) may be responsible[1].

  • Regulatory Frameworks on cryptocurrency in UAE

The underlying block chain technology, has been warmly welcomed in the UAE, but there is always remains a concern pertaining to the legal framework on cryptocurrency in UAE. Generally speaking as of today, there is no specific legislation as a whole on cryptocurrency in UAE. However, rules and regulations on the use of crypto assets, including cryptographic forms of currency, were recently issued to help solidify the above mentioned aim of UAE. Let’s take a look at each of these rules separately:

  1. DFSA

On 29th March 2021, DFSA has published its Framework for Regulating Security Tokens for public comments, in the form of consultation paper (Consultation Paper no. 138).  According to the Chief Executive of DFSA “The proposal to regulate Security Tokens is an important step toward establishing a clear and predictable path for issuers looking to raise capital in or out of the DIFC using Distributed Ledger Technology (DLT) and similar technology, as well as firms looking to participate in the market by conducting or providing financial services[2]”.

DFSA has taken a great step by framing a draft on a regulatory framework for digital assets (such security tokens and crypto-currencies), which is yet to be finalized. Further, this consultation paper has also proposed a provision relating to the crypto currencies, stating that, “a crypto asset can be created, stored and transferred using a DLT application”. However, the provisions proposed in this paper are not intended only for use with cryptocurrencies, virtual currencies, or other forms of trade. These proposal, on the other hand, are aimed toward Security Tokens.

We believe that the DFSA is continuing its efforts to establish a consistent framework and regulations pertaining to cryptocurrency, and we anticipate to see such regulatory framework in the near future soon.

  1. FSRA

In pursuant to Financial Services and Markets Regulations, 2015 (“FSMR”), FSRA has published its first guidance on Regulation of Crypto Asset Activities in ADGM in 2018, and further it has been amended several times. It creates the financial services legislative and regulatory framework in ADGM. On 24th February 2020, FSRA has issued its updated guidance on Regulation of Virtual Asset Activities in ADGM (“the guidance”), wherein the term ‘crypto assets’ has been renamed as ‘virtual assets’.

The primary focus of this Guidance is on the FSRA’s regulatory treatment of Virtual Assets and the financial services activities that can be conducted in relation to Virtual Assets within ADGM.

The FSRA has defined Virtual Assets in the FSMR as follows:

Virtual Asset” refers to a digital representation of value that may be traded digitally and acts as

(1) A medium of exchange,

 (2) A unit of account, and/or

(3) A store of value, but does not have legal tender status in any region.

A Virtual Asset:

 (a) Is not issued or guaranteed by any jurisdiction, and it performs the above actions only by agreement among the Virtual Asset’s users; and

 (b) Is distinguished from Fiat Currency (government issued currency), and E-money[3].

  1. SCA

The Securities and Commodities Authority (SCA) of the United Arab Emirates has finally released a long awaited regulatory framework entitled “The Authority’s Chairman of the Board of Directors Decision No. (21/R.M) of 2020 Concerning the Regulation of Crypto Assets.” (“Regulation”).  The purpose of this regulation is to regulate the offering, issuance, listing, and trading of crypto assets in the state, as well as associated financial activities.

As per Article (3), the provisions of this regulation shall be applicable to:

1) Anyone in the state who offers, issues, or promotes Crypto Assets.

2) Anyone who provides Crypto Custody Services and/or Operating a Crypto Fundraising Platform and/or a Crypto asset exchange in the state.

3) Anyone who engages in other financial operations in the State with relation to Crypto Assets.

However, it excludes the following from its purview:

  • Crypto assets issued by the Government and/or public undertakings.
  • A currency, virtual currency, digital currency, unit of stored value, or any other payment unit issued through a system licensed, approved and authorized by Central bank from time to time.
  • Securities held in dematerialized form and is not issued as Crypto Assets[4].
  1. Central Bank of UAE (CBUAE)

Due to the technological development, recently on 30th September 2020, CBUAE has issued an amended Regulatory Framework on Stored Value Facilities Regulation (“SVF Regulations”). It aims to establish the regulatory framework for crypto-assets. The SVF Regulation intends to authorize organizations in the UAE that issue or provide SVFs. SVF, as described in the Regulation, is a facility for which a customer pays a sum of money or money’s worth (which may include crypto assets or virtual assets, among other things) in return for the storage of that money or money’s worth’s value on the facility.

It define crypto assets as “Digital representations of value or contractual rights that are cryptographically protected and may be transmitted, stored, or exchanged electronically via a distributed ledger system[5].”

The CBUAE has made a statement asserting that as of currently, the CBUAE does not recognize (or acknowledge) crypto-assets or virtual assets as legal money in the United Arab Emirates, and it may only be utilized as high-risk investment assets. The UAE dirham is the country’s only legal currency[6].

The purpose of this article is to provide a general overview of the subject. To learn more about crypto assets and related information, please do not hesitate to contact HHS lawyers and legal consultants.

[1] Josias Dewey, Holland & Knight LLP, Blockchain & Cryptocurrency Regulation,2019 available at

[2] Dubai Financial Services Authority consults on regulation of Security Tokens available at

[3] Guidance – Regulation of Virtual Asset Activities in ADGM available at

[4] Available at

[5] Stored Value Facilities (SVF) Regulation available at

[6] UAE Has Not Legalized Crypto Currencies, Says Central Bank available at

M. Al Khatem

Trademark & Intellectual Property

M. Al Khatem is a senior Trademark and Intellectual Property (IP) expert in HHS Lawyers. He has handled some of the firm’s complex, high-profile cases – many involving the protection of trademark and IP rights.