From a position of suspicion and trepidation about everything crypto and ICO only a few months ago, the authorities in U.A.E. seem to have seen the light finally. The country’s financial regulator has launched a new regulatory framework that encompasses cryptocurrencies and related areas. Per a report published by Abu Dhani City Guide on September 9, 2018, U.A.E’s Securities and Commodities Authority (SCA) has approved a raft of new regulations on Fintech that includes cryptocurrencies and ICOs.
Crypto Rises in the Gulf
A statement issued by SCA stated that the move was caused by the rapid development of the cryptocurrency market and the response regulators in other countries towards regulating Initial Coin Offerings (ICOs). The press release stated that SCA’s board of directors has approved the regulators plan police ICOs and recognize them as securities.
A statement by U.A.E’s Minister of Economy and the Chairman of the Securities and Commodities Authority Sultan bin Saeed Al Mansouri announcing the resolution stated that the move was part of a wider initiative targeting the upgrade of the financial activities services platform in the country’s securities sector. The aim is to become on the par with the best international standards and practices. The resolution, according to the minister, will come into effect the day after it’s published in the Official Gazette. The statement said in part:
“The Board of Directors, having reviewed a study on the best international practices in this regard, has issued a directive that the procedures for trading digital token are to be regulated. The plan developed by the SCA includes a set of mechanisms as part of an integrated project to regulate digital securities and commodities.”
The financial watchdog’s approval means that the authorities will now treat cryptocurrencies as securities and they will soon introduce regulatory controls regarding digital tokens.
Fintech involves a broad range of innovations in the financial services sector and they include digital assets.
An Uneasy Green Signal
Cryptocurrencies have been in the spotlight lately because of their volatility and the emergence of fraudulent Initial Coin Offerings. As the U.A.E. takes closer scrutiny at Fintech, there are no doubt they will include the digital currencies in the package.
The initiative follows a similar move by the Abu Dhabi Global Market in June when the authorities launched a new framework to help in regulating cryptocurrency activities, including all the activities undertaken by custodians, exchanges and other intermediaries within its borders. The regulators will skate on thin ice since cryptocurrencies are viewed with distrust on one hand but ICO’s have collected over $13.7 billion so far this year.