Dubai Economic Zone Regulator Considering Crypto Regulations

The Middle East has been vocal in its embrace of cryptocurrencies and blockchain. Continuing in the trend, financial regulators in Dubai are now looking into the prospect of finalizing crypto laws in the region.

Opinions Welcome

Yesterday, the Dubai Financial Services Authority (DFSA), the Dubai International Financial Center’s financial regulator, published a business plan outlining its objectives for possible crypto regulation.

As the business plan confirmed, the agency is working on launching a regulatory framework that will govern the use of various digital assets.

According to the report, the upcoming regulatory framework will expand the DFSA’s regulatory scope for digital asset issuers, trading platforms, and other asset custodians. 

It will also address the classifications of digital assets, including cryptocurrencies like Bitcoin and other tokenized securities.

Local news agency The National also reported that the DFSA plans to publish two consultation papers to get feedback from industry players on the upcoming rules. 

Peter Smith, the agency’s head of policy, strategy, and risk, said that the papers are set to come out before June 2021.

The agency is hoping to cover all assets and firms operating in the crypto space effectively through the rules, with its business plan stating:

“We will build upon recent achievements in this space over the business planning period through developing a regulatory regime for digital assets (such as tokenized securities and crypto-currencies), having already implemented regulations supporting various innovative business models.”

Every Crypto Firm’s Dream Location

Based in the United Arab Emirates, the Dubai International Financial Center (DIFC) is a business hub that provides significant benefits to crypto and blockchain firms. 

For one, companies in the industry can set up offices here and enjoy zero taxes on profits and corporate taxes for at least 50 years.

In addition to the financial center, the Dubai Multi Commodities Center – the UAE’s largest free trade zone – has announced plans to launch a new “crypto valley,” that will encourage companies to establish their presence there.

So far, the move appears to be working. The DIFC’s website states that the special economic zone serves over 2,500 registered companies.

Many of these firms come from Asia, the Middle East, and Africa, with the DIFC claiming to be an “independent regulator with a proven judicial system.”

Last year, blockchain giant Ripple Labs also set up shop in the DIFC. The blockchain firm explained that it had a significant customer base in the MENA (the Middle East and North Africa) region. With a unique opportunity to co-locate with its customers, the DIFC provides a strong natural choice.

Ripple itself has been toying with the idea of leaving the United States for a while now. It’s unclear whether the DIFC office could serve as its base in the future.