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Emirate Reinforces Blockchain Strategy To Curb Frauds In Crypto Currency

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Staff Writer, TLR

Published on July 14, 2023, 17:41:00

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The blockchain based cryptocurrency trend has caught on across the globe and UAE is no exception. Unlike the fiat currencies that are regulated by a single entity within the respective countries, cryptocurrencies are a part of a decentralized system where individuals or companies can make transactions autonomously.

With major countries contemplating their entry into the crypto market, security concerns are raised so as to create a safer web 3.0 for investors, entrepreneurs, innovators and casual crypto enthusiasts.

The UAE has been spearheading the race to form a blockchain centric Government as per the ‘Emirate’s Blockchain Strategy 2021’ launched back in 2018. It is to be noted that significant progress has been made by the Emirates regarding the strategy and no one on this earth can deny it.

The law enforcement, judiciary, policy makers and government offices are taking significant steps to ensure crypto-asset security of the investors, UAE residents, entrepreneurs and innovators. As the only Government in the world that is leading the blockchain technology innovations and integrations, the UAE is sure to make things safer for healthy crypto related trades.

 

The Frauds

The multitude of companies and individuals operating on the blockchain platform has clearly indicated the need for extra levels of security of their crypto assets.  Matters related to cyber security got serious after a ‘get rich quick’ cryptocurrency scam was busted late this September. It led to 10 year imprisonment of nine scamsters after they cheated several Abu Dhabi residents off Dh18 Million.

Although the law enforcement and judiciary was swift in this case, it only leads to concerns about more scams like this creating havoc in the UAE states. Another case of cryptocurrency scam in the UAE is about three expatriates of Asian origin. They were convicted by lower courts and fined Dh80,000 each for scamming an Abu Dhabi resident off Dh242,326.

The accused trio blocked the victim’s phone calls, which raised an obvious suspicion in the victim who contacted the law enforcement about this case. The police got to work immediately, identified the accused and arrested them. The Abu Dhabi court of Cassation upheld the lower courts’ rulings and thereafter handed down the sentences after the accused were found guilty in this fraud case.

 

What is UAE’s Crypto Regulation Against?

The Dubai Police has teamed up with cryptocurrency exchange platform ‘BitOasis’ to inform and educate residents of Dubai about crypto related frauds. The police agency is extensively training its officers in crypto and blockchain technology. The goal of the collaboration is to develop effective investigation approaches to address the hazards associated with cryptocurrency trading.

The Dubai based ‘BitOasis’ said that they have been working with key policymaking bodies in an effort to combat crypto fraud. The UAE Government is reportedly making active efforts to protect the interests of crypto investors online.

Apart from scams, asset theft is another form of crime that happens when unsecured accounts are hacked and assets are siphoned to undisclosed blockchain addresses. These thefts have been more common worldwide since hacking into accounts with low security measures have become easier to hackers. Awareness to the investors and traders on this matter will help reduce such cases.

The whole scheme of crypto security and safety measures is also to keep money laundering and terror funding at bay. Although there have been moves made by the UAE Government to tackle these cases, stringent laws are yet to follow.

 

Acceptance of Cryptocurrency in the UAE

Several residents of the UAE have invested their money on cryptocurrency and have been trading them on dedicated exchanges. A survey conducted recently in the UAE has revealed that five in ten residents have planned to hold cryptocurrency assets within a year. The same survey had 63 percent participants mentioning that they are more open towards cryptocurrency since that past year.

At present in the UAE, Bitcoin is still not considered legal tender while there are no restrictions on trading it either. Several cryptocurrency exchanges that serve residents of the UAE show an upward trend in the number of investors jumping into the bandwagon.

The confidence in cryptocurrencies among residents comes after the UAE begun having a progressive approach to foster innovations in blockchain based startups and financial technology. Back in 2018, the UAE resolved to set an example by adopting the ‘Emirate’s Blockchain Strategy 2021’ and aiming to mount 50 percent or more of Government transactions onto the De-Fi (Decentralized Finance) platform.

 

Growing a Business Ecosystem

The Dubai Financial Services Authority (DFSA) had requested for public input in March this year about a regulatory framework for blockchain technology. The results of which must have stood in favour of cryptocurrency and blockchain technology since there have been no restrictions placed.

In September 2021, the United Arab Emirates’ Securities and Commodities Authority had entered into an agreement with the Dubai World Trade Centre Authority (DWTCA) standing in support of crypto asset trading within the DWTCA’s free zone.

It is to be noted that in 2018, the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM) had created a framework that allowed operation of crypto asset businesses. Following which, Abu Dhabi came to be known for its blockchain friendly approach that invited a plethora of De-Fi and blockchain based companies.

The Hub71 accelerator community under the ADGM was supported by Abu Dhabi’s Ghadan 21 programme that was responsible for bringing in more than a hundred startups. Graduates from NYU Abu Dhabi campus and Khalifa University have also contributed towards the growth of Abu Dhabi’s blockchain initiative.

The Dubai Multi Commodities Centre (DMCC) has created a conducive atmosphere for businesses operating on the blockchain platform. DMCC has paved the way for investors all over the globe to set up their business through a regulated activity called “Proprietary Trading in Crypto-Commodities” which essentially considered crypto-assets as commodities.

The DMCC Crypto Centre now provides infrastructure and amenities for entrepreneurs and pioneers alike to expand their crypto based businesses. The centre currently provides access to co-workspace, consultancy, education, innovation and incubation. Thus, making it a haven for blockchain entrepreneurs across the world.

An instance in 2017 raised alarm among crypto enthusiasts when the UAE Central bank issued a regulatory framework prohibiting virtual currencies and its transactions. It was soon followed by a statement released by the Governor of the UAE Central Bank which mentioned that the regulations on virtual currencies did not apply to blockchain technology and its allied cryptocurrencies or exchanges.

 

Adopting Blockchain Tech for Effective Governance

The Dubai Blockchain Strategy has already enabled the Dubai Land Department (DLD) to use secure blockchain technology to consolidate real estate into one solid structure. The blockchain database records real estate contracts and links the contracts with telecommunications system, property related bills as well as the Dubai Electricity and Water Authority (DEWA).

With this move from Dubai, governance will be much simpler since tenant data like identity cards and visas are incorporated into the blockchain system. Thereby encouraging the digital way of life, without ever having to write a cheque or print papers. The whole system is not only paperless but also quick to execute.

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