In a recent announcement brought to the limelight by Irina Heaver, a Crypto and blockchain lawyer detailed the recent regulations put in place by the United Arab Emirates regarding the use of cryptocurrencies in their country.
The post was intended to bring to the awareness of people about the decision taken by the Central Bank of the UAE (CBUAE) about their plans to restrict the use of cryptocurrencies that had their backing from any other currency than the UAE’s dinar.
In this article, we will look more into the details of the story and make our own interpretations and conclusions about the recent news.
Did the UAE just ban all cryptocurrencies?
The news of the alleged UAE ban on all cryptocurrency tokens within its country came as a surprise and a shock to most people who saw the country throughout the years act as a champion of liberal policies when it came to conducting economic activities.
The United Arab Emirates, which has historically thrived under the support of foreign direct investment was a place that operated under relaxed economic and trade policies.
The absence of capital control measures and the freedom of contract that they allowed under commercial law was something that attracted hordes of investors to the Middle Eastern country.
According to the Words by the prominent Crypto and Blockchain lawyer, Irina Heaver the recent decisions taken by the UAE could significantly impact its journey toward becoming an aspiring digital economy.
So, the best way to answer the question that has been posed at the beginning of the section is to say “Kind of but not really”
Now let us look at what exactly the new regulations bring up in the next section
What exactly do the new regulations curtail?
The new law seems to prohibit any trade or transaction that happens through a coin that doesn’t have its backing from the national currency of the UAE, the Dinar.
The regulations also put restrictions on using foreign payment tokens to buy anything other than virtual assets.
Furthermore, the law also gives the Central Bank of the UAE the supreme authority to impose penalties and sanctions on any violators of the laws however they deem necessary.
What were the opinions of Irina Heaver regarding the new regulations?
In her own interpretation of the regulations, the law is essentially a ban on all cryptocurrency tokens if we account for the fact that neither an authorized Payment token nor a registered foreign payment token currently exists as of now according to the economic policy determinant group of UAE.
This could mean that any cryptocurrency transaction that happens currently in the UAE can be regulated, and its acting authority or individual can be punished for carrying out the transaction.
She believes that this move will be a significant setback for the UAE’s economy and could tarnish the image of the perceived investor-friendly nation.
In the later parts of her post, she talks about the lack of an organized group in UAE for the advocacy of cryptocurrency akin to the Swiss Crypto Valley association based in Switzerland that recently lobbied against the rule changes that tried to restrict the staking mechanism for cryptocurrencies.
The lack of any organized advocacy group for Web3 and the crypto industry is something that she saw as one of the reasons for the disadvantage that crypto traders faced in the country.
She also pointed out that the decision could also potentially limit the nation at the cost of their interest due to the lack of counterarguments that opposed the notion.
Final thoughts
It is unclear as of now about which path the UAE will be taking with its recent decision concerning the cryptocurrency token ban but what can be concluded is that the new regulations will have to be followed up with measures to make up for the loss of economic activities that could have potentially benefitted the nation.
Only time will tell if the new decisions taken by the UAE will lead to a better and more sustainable crypto-economic integration into the nation’s economic ecosystem or will become one of its long-time regrets.
