Crypto lawyer Irina Heaver tweeted that the "Stablecoin Supervision and Licensing Regulations" approved by the Central Bank of the United Arab Emirates (CBUAE) at the beginning of this month will in disguise prohibit stablecoin payments other than those based on the local legal currency Alian Dirham (DH). This This is quite unfavorable for the country, which has been seen as actively promoting the digital economy in the past.
Factsheet: UAE Financial Infrastructure Transformation (FIT) Program
Earlier this month, the Board of Directors of the Central Bank of the United Arab Emirates (CBUAE) discussed the country’s “Financial Infrastructure (FIT) Plan”, which aims to promote financial innovation and digital transactions and promote the development of the country’s digital economy.
At that time, the meeting approved the release of stablecoin regulatory regulations, which clearly regulated the issuance, licensing and supervision details of payment tokens.
Kokila Alagh, founder of KARM Legal Consultants, mentioned in an interview with local media Unlock Blockchain:
The stablecoin must be backed by the United Arab Emirates dirham (DH) and cannot be linked to other currencies or digital assets; at the same time, stores and service providers can only accept payment with tokens based on the United Arab Emirates dirham, and consumers cannot Payment cannot be made through other virtual assets.
UAE plans to ban crypto payments?
Irina Heaver, a lawyer in the field of encryption, expressed concern on social media
Heaver noted that the new regulations require payment tokens to be backed by the local fiat currency, the Albanian dirham (DH), and not be pegged to other currencies.
In other words, only stablecoins based on the United Arab Emirates dirham, namely the central bank digital currency (CBDC) "digital dirham", can be issued and used to pay for daily consumption:
Currently, only digital dirhams and registered foreign payment tokens can be used, neither of which currently exist.
It added, "CBUAE can impose fines or sanctions on the above-mentioned violations in accordance with the law."
Irina Heaver: The promotion of digital economy may be hindered by this
Heaver emphasized that the UAE's relatively open economic policy has always attracted a large amount of foreign capital, including free capital flows and business cooperation, allowing all parties to freely negotiate their transaction terms, including payment methods for both parties:
However, the new regulations conflict with the UAE's past pro-business stance and may deter foreign capitalists.
She also believes that stablecoin issuer Tether’s USDT is the “core” of blockchain and crypto transactions, and the UAE’s digital development plans may be hindered by the law’s ban on other stablecoin transactions (including USDT):
The new law may make the UAE’s crypto industry environment unfavorable and run counter to the country’s image and digital finance goals.
UAE lacks encryption industry association
In addition, he also mentioned the lack of representation of the encryption industry in the UAE, saying that the country lacks an industry association like the Swiss Crypto Valley Association (Crypto Valley Association), which is not conducive to helping to fight against improper local regulations:
The lack of a unified voice for the UAE’s crypto industry is a major disadvantage, leaving no one able to counter what she considers to be “ill-thought-out” policies by the authorities.
This article: Will the UAE ban crypto payments and only allow CBDC consumption? Crypto Lawyers: Harmful to the Development of the Country’s Digital Economy first appeared on Chain News ABMedia.