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UAE Initiative For Crypto Based Transactions

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Staff Writer, TLR

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

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UAE, Crypto Based, Blockchain, Blockchain, Cryptocurrency

In 2008, when Satoshi Nakamoto initiated the Bitcoin phenomenon, the names "Blockchain" and "Bitcoin" were foreign to the general public. Today, with one of the world's first cryptocurrency "cold storage" firms operating in Dubai, it is evident that the tides have moved, and the UAE crypto industry is actively becoming a part of this worldwide trend. 

The blockchain is a decentralized public or private ledger that records transactions between several participants. This technology is exciting to investors worldwide because of this characteristic of "decentralization." Nakamoto utilized the characteristics of blockchain technology to develop Bitcoin, the most popular cryptocurrency. Cryptocurrency is digital money that runs via the use of blockchain technology. Unlike fiat currency, which is governed by a single institution such as a central bank, cryptocurrencies are confirmed via a decentralized system in which any person participating in the process may verify the transactions. 

Now the UAE is working towards implementing one of the most stringent regulatory frameworks on crypto-based transactions, whether individual or for more significant real-world transactions. This applies to both Bitcoin and other cryptocurrencies. This key point was made highly evident by the new laws, which stipulated that any property transaction in the UAE that exceeded a particular quantity utilizing virtual assets should be registered before the appropriate agencies. 

An assessment of what the UAE's authorities are doing and what this implies for investors and companies. 

Will there be different laws for investing in cryptocurrencies and protecting investors? 

There are many rules about how cryptocurrencies can be used to store wealth, raise money, make digital payments, or trade for other assets. UAE regulators have added to their rules to clarify that crypto and virtual assets are included. The UAE has been one of the first to act. However, they are being used increasingly in the Metaverse, a new online world. We also see a new type of asset with NFTs. There will need to be more specialized laws and rules to protect investors and set up legal jurisdiction. The Dubai Virtual Assets Regulatory Authority (VARA) has been set up with a relatively wide range of regulatory powers. Existing regulators like the ADGM are also constantly making changes to their rules. 

Does VARA and the Abu Dhabi Digital Currency Market (ADGM) provide a framework for crypto trading and asset protection?

VARA is entrusted with managing the issuing and trading of virtual assets and virtual tokens, as well as their service providers. They are already engaged in relevant activities. In addition, they have the authority to monitor trade, prevent price manipulation, set rules and regulations to identify questionable behaviors, and safeguard investors. 

The increase in crypto-related fraud, and how the investors from the UAE have been affected. A verdict has been rendered against the culprits. Are they prosecuted under local criminal statutes? 

Under Article 48 of the Federal Law No. 34 of 2021 on Combating Rumours and Cybercrimes, an unlicensed promoter of unregistered virtual currencies could be subject to criminal prosecution. Scams involving cryptocurrencies may involve other crimes for which there are separate statutes. Phishing schemes that fraudulently obtain personal information are a prime example. Often, for a victim to recover losses or damages, filing a civil lawsuit in addition to a criminal complaint may be necessary. Additionally, one should consider legal jurisdiction and the most effective means of prosecuting the perpetrators if they are located outside the UAE. 

Data Protection Law of the UAE. What a person should do to protect his online privacy concerning his data?

The legislation regulates how private UAE-based firms acquire and manage personal information. It is significant since many of our daily tasks have moved online. We share our information with corporations without much consideration. 

Before collecting and using an individual's personal information, companies covered by the statute must get the individual's permission. Consent should be received straightforwardly and unambiguously, whether on paper or electronically. In addition to limiting their use of personal data to legitimate business objectives, companies are prohibited from sharing their data with other parties except where required by law. Despite this rule, individuals should carefully assess the circumstances before revealing personal information. 

More UAE companies are accepting cryptocurrency payments — Regarding such transactions, are the applicable laws evident to the customer and the business?

If enterprises intend to participate in this industry, they must familiarize themselves with the applicable legislation to guarantee compliance with their legal responsibilities. Consumers should also conduct their research. For instance, users should identify the service providers' governing bodies. Consumers might register complaints with local authorities over a service provider's wrongdoing if the provider is locally licensed and regulated. 

How do UAE laws address the issue of data privacy?

There are many rules concerning data privacy in the financial and medical sectors. The most current federal regulation, Data Protection Law No. 45 of 2021, expands data protection obligations to previously unregulated private organizations. The laws of the UAE have been expanded to address the usage of virtual assets and how to register such transactions with the government. 

In conclusion, prospective crypto investors should familiarize themselves with the UAE's legislation and new regulations before making any investments in the country. The world of virtual currency is still in the process of establishing its foundation; nevertheless, the UAE has always been eager to welcome innovations with reasonable restrictions within the framework of the legal system. Even for those who have fallen victim to cryptocurrency scams, the government is giving remedy through the criminal and civil justice systems.

For any enquiries or information, contact info@thelawreporters.com or call us on +971 52 644 3004 

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