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Regulatory push in the UAE to make cryptos and tokens viable financial vehicles

The Dubai Financial Services Authority (DFSA) have, in late March 2021, enacted a 30-day window for public comments on security token regulations

The regulatory agency plans to publish laws for utility tokens and “exchange tokens” later in 2021 KIKLABB has become the first UAE government-owned entity to accept crypto payments The assets of companies operating in the field of digital currency have reached $40 billion

The Dubai Financial Services Authority (DFSA) have, in late March 2021, enacted a 30-day window for public comments on security token regulations, as part of efforts to create a standardized framework for cryptocurrency regulations in the city.

 DSFA is instituting the “Framework for Regulating Security Tokens.”

Dubai’s security token infrastructure focuses on providing regulatory clarity across three major areas of concern. 

The first part deals with creating a regulated framework for offering and trading digital securities to investors including retail buyers.

The DFSA is also prioritizing quality control protocols to protect retail investors with security token issuers complying with strict disclosure requirements in their prospectuses.

The third focuses on the support services associated with security tokens. These include asset custody providers and advisory services.

DFSA chief executive Bryan Stirewalt said: “The proposal for the regulation of security tokens is a key milestone in paving a clear and certain path for those issuers who wish to raise capital in or from the DIFC using DLT and similar technology.”

The regulatory agency plans to publish laws for utility tokens and “exchange tokens” later in 2021.

In July 2020, the UAE debuted a blockchain-based Know Your Customer platform.

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UAE free zones for cryptos 

Cryptocurrencies are now accepted as a form of payment at the KIKLABB free trade zone in Mina Rashid, Dubai.

KIKLABB has become the first UAE government-owned entity to accept crypto payments, according to a Gulf News report.

The free zone is allowing customers to pay for Dubai trade licenses and visas with bitcoin, ether and the tether stablecoin.

“KIKLABB is collaborating with international partners for payment processing of cryptocurrency transactions, guaranteeing all regulations are adhered to as a government-owned entity,” KIKLABB CEO Tasawar Ulhaq told Gulf News.

Also, the Dubai Multi Commodities Center (DMCC) signed the initial agreement with the Securities and Commodities Authority (SCA) to allow licensing for firms that deal with crypto assets.

The licenses will be offered by the specialized DMCC Crypto Center after being screened by the SCA, state news agency WAM has reported.

“As we continue to make strides within the crypto and blockchain space, the DMCC is making it easier for crypto and blockchain businesses to set up and operate in Dubai,” DMCC CEO Ahmed bin Sulayem said.

The free zone authority earlier signed a deal with a Swiss incubator that will bring the ecosystems of leading blockchain and cryptographic technologies to Dubai.

Calls to adopt cryptos 

Experts at the World Government Summit Dialogues recently discussed how cryptocurrency could be the greatest wealth trend in the world today and explained how prosperity and the future are anchored on the digital economy.

Brock Pierce, the founder of Blockchain Capital and IGE, said: “Nearly half of the world’s billionaires now have made their money in crypto. As we live through what could be the greatest wealth trend in the history of the world, it’s important to have more people participate in it.” 

Anthony Di Iorio, founder and CEO of Decentral and co-founder of Ethereum, advised governments on the “need to embrace cryptocurrencies and educate people about them to ensure they’re not hindering the growth of their countries.”

In another session titled ‘Decentralising Finance for an Inclusive Economy’, Jutta Steiner, CEO and founder of Parity Technologies, said cloud and blockchain technologies can fast-track the adoption of innovations in developing financial models and direct financing as well as empower individuals and entrepreneurs to build more sustainable and stronger digital economies.

The assets of companies operating in the field of digital currency have reached $40 billion.