As other countries continue to debate how to regulate initial coin offerings, the UAE market regulator is planning to inject further legitimacy for digital currencies and digital tokens. Considering the fact that warnings were issued earlier, this is good news for the cryptocurrency space.
The United Arab Emirates has been closely monitoring the ICO industry. The country’s market regulator has issued a stern warning earlier this year that concerns ICOs. In line with this, lawmakers continue to be wary of companies trying to raise funds via ICOs with the absence of regulation or oversight. However, no ban has so far been implemented, or will ever be in the immediate future.
According to a September 10 report by Forbes Middle East, UAE’s Securities and Commodities Authority (SCA) has presented a new resolution aimed at approving regulations. The regulations are set to deem digital currencies as securities and introduce controls over ICOs. The more stringent guidelines to protect consumers and investors still allow the trading of virtual tokens.
However, the agency has provided very little details regarding its broader plans for fintech regulations. According to the announcement, the SCA has created an outline that includes a number of mechanisms aimed at regulating digital securities and commodities.
The effort is part of UAE’s rising focus on the fintech industry. Other Middle East countries have taken similar steps with regards to financial technology and innovation. This signifies that additional regulatory efforts may be implemented in the future.
UAE has been trying to position itself at the forefront of the crypto industry. The country has recently introduced a framework designed to regulated spot crypto asset activities, which surprised industry players. A few months prior, the Dubai Financial Services Authority has issued a warning about investing in digital currencies.
This goes to show that countries are not keen on imposing a ban on cryptocurrency. Policymakers instead try to incorporate legitimacy to the nascent assets by adapting existing guidelines to Bitcoin and other assets. UAE regulators recognize the need for a new framework. And treating digital currencies as securities is a crucial first step towards this direction.