Cryptocurrency is a global phenomenon with the possibility of disrupting traditional financial systems. The UAE and Dubai aim to become the worlds biggest cryptocurrency and blockchain hub to implement digital assets as legal tender.
This article discloses the regulation of Bitcoin and Cryptocurrencies and answers the question, “Are Bitcoin and crypto legal in the UAE?”
What Is Cryptocurrency?
Cryptocurrency, or crypto, is a block of digital coins used to buy goods and services via an online ledger. The largest cryptocurrency worldwide is Bitcoin (BTC). It has a market cap of $1.2 trillion. The second largest cryptocurrency is Ethereum (ETH) at $353 billion. Tether (USDT) takes the third spot at $68 billion.
UAE traders have been waiting for new paths that enable wider investments into digital assets. Cryptocurrency gained momentum in Dubai, and in 2021 the government took the first steps to make UAE a crypto and blockchain friendly region.
UAE to Become The World’s First Country to Fully Adopt Cryptocurrencies?
Since cryptocurrency has become increasingly popular in the Mena region, the government enabled the free trading zones to conduct crypto-related business activities in the UAE. The nation aims to become a global hub for cryptocurrency as market capitalization hits $1.4 trillion, up 86 percent year to date.
In 2021, the Securities and Commodities Authority (SCA) signed agreements with leading flagship zones in the UAE, including DMCC, DAFZA, and DWTCA. These agreements make it easier for blockchain and crypto related businesses to receive a license and operate in the UAE.
The SCA’s agreement will support Dubai’s reputation as a well-positioned center and increase trading security. The goal is to create a supportive regulatory framework for crypto related startups and encourage virtual asset transactions. There is a lot of potential for crypto trading in the Mena region. Secure regulations and investor awareness initiatives will encourage mass adoption of crypto assets in the UAE.
As of today, the UAE has become a popular destination for crypto and blockchain investors. The recent move by the SCA enables crypto assets trading within the Dubai World Trade Centre. These new laws and regulations make the country open to new crypto startups.
How Does The Central Bank Of The UAE Support The Rise Of Cryptocurrency?
To back the effort in adopting cryptocurrencies and blockchain technology, The Central Bank of the UAE has announced its own digital currency. The CBUAE has a market-leading strategy as part of its 2023 to 2026 goals to position itself among the world’s top 10 central banks.
The public statement released by the bank reveals there are seven key objectives for the following years. These include the issuance of the digital currency Govcoins and digital driving transformation in the UAE’s financial services sectors.
The Central Bank of the UAE commits to using the latest artificial intelligence and big data solutions to support cryptocurrency trading in the area.
How Are Cryptocurrencies Regulated?
Cryptocurrencies in Dubai fall under the authority of the Financial Services Regulatory Authority, the Securities and Commodities Authority, and the Dubai Financial Services Agency.
The SCA/FRSA oversees the trading of digital coins. The Central Bank in UAE considers crypto trading as highly risky, which is why all parties involved in the transaction follow strict compliance to the Anti-Money Laundering and Counter-Terrorism Financing Laws of the UAE.
Crypto-Friendliness of the UAE Banking Sector
The UAE central bank is showing its support and openness for digital assets by announcing its own version of cryptocurrency. They have released a virtual asset scheme with the help of an international organization. Banks in the UAE will fully accept digital coins and blockchain technology by 2025 as part of their plan to position it among the top ten central banks.
UAE Expects To Have Over 1500 Operational Crypto Businesses Registered by 2022!
The adoption of new laws and regulations in the UAE opens doors for new cryptocurrency-related business and institutional investors.
Dubai remains the main hub for investors interested in digital coins in the region. Till now UAE citizens were able to buy, sell and hold cryptocurrencies. As of today traders have the power to buy anything using digital coins.
The Central Bank of the UAE supports the cryptocurrency market and does its best to issue new laws amid the rise of crypto.
Summary
Crypto assets come with many risks and impressive potential of rewards. Cryptocurrency represents a revolution in the digital transaction sector, and the UAE aims to be a leader in the industry.
The market share of cryptocurrency in the Middle East is continuously growing thanks to the new laws and regulations supported by the Central Bank of the UAE. The cryptocurrency regulations are still new, and many changes are to be expected in the future.
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