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One of the largest free zones in the Middle East, Africa, and South Asia (MEASA) region is the Dubai International Financial Centre (DIFC), which has imposed a new Digital Assets Law.
The new Digital Assets Law will redefine the existing legislative system to include these newly developed tools. The law will change previous contracts, insolvency, damages, obligations, securities, and personal property laws, amending them to account for the existence of these assets.
Digital Assets are getting recognized in the laws for the first time.
The rising popularity of digital assets is pushing them to gain recognition in the laws, and for this reason, more lawmakers are including these digital assets in innovative law frameworks.
The largest financial center of the MEASA region is the Dubai International Financial Centre (DIFC). The DIFC is a tax-free special economic zone that has recently implemented one of the world’s first laws (as lawmakers address it) surrounding digital assets. These laws account for the existence of this asset class.
Apart from its definition, the Digital Assets Law of DIFC changed a series of other laws, such as the contracts law, the law of obligations, the law of security, the law of damages and remedies, the trust law, and the foundations law, to address some determinations.
Some laws have begun to consider some digital assets as money, and some rules have modified the definition of this asset class as defined in this new law.
Understanding New Digital Assets Law
The Chief Legal Officer at DIFC Authority, Jacques Visser, explained the capabilities of this law and its pioneering character in the world. He highlighted that the DIFC considers this document significantly “groundbreaking,” because it is the first legislative implementation to comprehensively set out the legal characteristics of digital assets as a matter of property law.
Moreover, the documents include how interested parties may control, transfer, and deal with these digital assets.
The digital assets law was approved in Dubai in 2022. It has appointed the Virtual Assets Regulatory Authority (VARA) as the agency in charge of the sector. The free zone has its own governing body, the DIFC authority, so the law does not apply to DIFC. It also had its own financial service regulator, the Dubai Financial Services Authority (DFSA).
In August 2023, the DIFC announced that it would subsidize 90% of the cost of the licenses for Web3 and artificial intelligence (AI) businesses. The companies or industries are waiting to open operations in the special economic zone.
The new laws will create the largest cluster of new-age tech companies in the Middle East and North Africa (MENA) region. The new law was developed to promote financial services and attract international investment. The DIFC operates with a legal system and courts based on English common law, separate from the wider United Arab Emirates.
The legislation aims to ensure the DIFC keeps pace with technological developments and to allow legal clarity for investors and users of digital assets. The DIFC’s Digital Assets Law follows a review of the regulatory approach taken by various jurisdictions worldwide and a public consultation period held last year, which was expected to be implemented on March 8.
The new laws will significantly impact the Dubai crypto market.
Amanda Shinoy is one of the few women in the space invested knee-deep in crypto. An advocate for increasing the presence of women in crypto, she is known for her accurate technical analysis and price prediction of cryptocurrencies. Readers are often waiting for her opinion about the next rally. She is a finance expert with an MBA in finance. Quitting a corporate job at a leading financial institution, she now engages herself full-time into financial education for the general public.
