Coinspeaker Dubai Court Change Stance on Crypto Payment for Salary
Dubai Court of First Instance has recognized the use of crypto for salary payments as valid under employment contracts. This marks a significant milestone for the United Arab Emirate’s judicial approach towards digital assets. According to Irina Heaver, a partner at UAE law firm NeosLegal, the ruling in case number 1739 of 2024 demonstrates a shift from the court’s earlier stance in 2023.
Court Turns Back on Employee
Last year, the court outrightly denied a similar claim mainly because the crypto involved lacked precise valuation. Heaver acknowledged this change of sentiment as a “progressive approach” towards integrating cryptocurrencies into the country’s legal and economic framework.
The case started with an employee who accused his employer of not paying wages. He later filed a lawsuit for wrongful termination compensation and other benefits. The worker’s employment contract carried a monthly salary in fiat and 5,250 in EcoWatt tokens. For six months, the employer failed to pay the token portion of the salary to this employee.
Though the court acknowledged the digital asset portion of the employee’s salary in 2023, it still did not enforce the crypto payment. The court believes the employee needed to provide a more straightforward method for valuing the currency in fiat terms at the time. Heaver noted that,
“This decision reflected a traditional viewpoint, emphasizing the need for concrete evidence when dealing with unconventional payment forms.”
Improvement in UAE Crypto Payment Stance
Fast-forward to 2024, when the court finally ruled in favor of the employee and also took it a step further by enforcing that the employer pay the crypto salary as stipulated in the employment contract without converting it into fiat. With this new outlook, Heaver thinks this decision reflects a broader acceptance of cryptocurrency in employment contracts. This is not only a positive twist for the employee in this case, but might trigger a major shift in the Dubai Web3 landscape.
Additionally, it highlights the court’s recognition of the evolving nature of financial transactions within the Web3 economy. In regions like New Zealand, crypto is accepted as payment for income and salary. More regions may adopt this option in the near future.
Generally, crypto use cases are fast reaching many sectors and regions. The introduction of spot Bitcoin and Ethereum ETFs has played a significant role in popularising digital assets even beyond BTC and ETH. With this growing popularity, several jurisdictions have invested effort and resources into improving tax reporting for the digital asset ecosystem.
In May, the former director of Bitmain and his team introduced FinTax, an innovative software built to simplify tax reporting for crypto assets. The newly introduced software will make tax calculations for crypto assets easy. Ultimately, Hong Kong-based digital asset traders on the platform can quickly determine their tax liabilities on salaries and profits generated from digital currencies.
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Dubai Court Change Stance on Crypto Payment for Salary