New UAE Regulations Could Ban Crypto Payments, Says Legal Expert Irina Heaver
Summary:
Crypto and blockchain law specialist Irina Heaver expresses concerns that new regulations in the United Arab Emirates (UAE) could effectively ban crypto payments. The Central Bank of the UAE recently approved rules stating that all payment tokens within the country must be supported by UAE dirhams, and cannot be associated with other currencies. Heaver fears this could threaten the UAE's progress in the digital economy, impacting the use of stablecoins like Tether and discouraging foreign investment. Furthermore, the lack of a unified voice for the crypto and Web3 industry means there's nobody to challenge policies that could harm the sector's growth locally.
Irina Heaver, a specialist in crypto and blockchain law, speculates that recent regulations could potentially ban crypto payments in the UAE. The Central Bank of the United Arab Emirates (CBUAE) Board of Directors reviewed several projects concerning the country’s financial infrastructure program (FIT) on June 5. FIT aims at fostering digital evolution. During the meeting, regulations were approved for the issuance of payment token services, with the aim of supervising and legitimizing stablecoins. The new rulebook suggests that all payment tokens within the country must be supported by UAE dirhams and cannot be associated with other currencies.
Heaver stated to Cointelegraph that these fresh rules could ban the use of cryptos for domestic payments. According to these rules, the Central Bank bans cryptocurrencies from being used to pay for goods or services unless they are licensed payment tokens denominated in dirhams or their foreign counterparts - neither of which currently exist. She feels that this move could contradict the country's pro-business and pro-investment orientation.
Historically, Heaver commented, the UAE has attracted foreign capital thanks to its liberal practices, including no controls on capital and freedom to draft contracts under commercial law. Such freedom extends to establishing the terms of the transaction, including forms of payment and currency choices.
Heaver expresses apprehension about the alignment of this new regulation with the country's economic strategies and its potential impact on the inflow of foreign capital. She also suggests that Tether (USDT), which she describes as the "backbone of transactions" in crypto and Web3, could be affected by this decision. Since the UAE is endeavoring to foster development in this sector, Heaver predicts that prohibiting stablecoin use in transactions could hamper its progress. She believes this change in policy could have negative implications for both the UAE's standing and its aspirations in the digital economy.
Heaver also notes the lack of industry representation in the UAE, particularly compared to Switzerland's Crypto Valley Association. She asserts that the absence of a unified voice for the nation's crypto and Web3 industry is a considerable setback, as it leaves no one to overlook policies that might not be well thought out and could prove harmful to the sector in the UAE.
Published At
6/26/2024 1:55:53 PM
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