Lawyer Irina Heaver Warns of UAE Crypto Payment Restrictions
YEREVAN (CoinChapter.com) — The Central Bank of the United Arab Emirates (CBUAE) has introduced new regulations that could significantly impact the crypto industry warns crypto and blockchain lawyer, Irina Heaver. On June 5, the board of directors discussed projects under the financial infrastructure (FIT) program, aiming to boost digital transformation. Notably, they approved new guidelines for payment token services, stating that these tokens must be backed by UAE dirhams and cannot be linked to other currencies.
These new rules prohibit the use of cryptocurrencies for payments within the country unless they are licensed dirham payment tokens or registered foreign payment tokens. Currently, neither of these options exists.
UAE Considers Crypto Payment Ban. Source: @AskToRahulSingh New UAE Rules Threaten Crypto Payments
Irina Heaver, a prominent crypto and blockchain lawyer, has raised concerns about the new regulations. She told that these rules forbid crypto payments in the UAE. According to Heaver, the CBUAE is
“prohibiting the acceptance of cryptocurrencies for goods and services unless they are licensed dirham payment tokens or registered foreign payment tokens.”
Irina Heaver warns of new UAE regulations. Source: Irina Heaver
Moreover, Heaver noted that this move contradicts the UAE’s historical pro-commerce stance. The country has thrived on foreign direct investment due to its liberal policies, absence of capital controls, and freedom of contract under commercial law. Customarily, these policies have allowed parties to agree on their transaction terms, including payment methods and currencies.
Heaver: Tether Ban Could Hinder UAE’s Digital Economy Growth
Primarily, the new regulations could hinder the progress of the Web3 and crypto sectors in the UAE. Heaver pointed out that Tether (USDT) has been the “backbone of transactions” in these sectors. Additionally, she stated that by prohibiting the use of stablecoins, the new rules risk slowing down the development of the digital economy in the country.
“This policy shift could signal a less favorable environment for the crypto industry, which is not beneficial for the UAE’s image or its ambitions in the digital economy,”
She added.
Heaver Highlights Lack of Unified Crypto Advocacy in UAE
Moreover, Heaver also highlighted the lack of strong industry associations in the UAE that can advocate for the crypto and Web3 sectors. She mentioned the Crypto Valley Association in Switzerland as an example of effective industry representation. This association successfully lobbied against unfavorable regulations imposed by the Financial Market Supervisory Authority (FINMA) in relation to staking.
In contrast, the UAE’s existing associations are fragmented. They often serve as platforms for deal flow and business development rather than advocating for the industry’s interests.
“The absence of a united voice in the UAE’s Web3 and crypto industry is a significant disadvantage,”
Heaver noted.
New Crypto Rules Could Deter Foreign Investment
Notably, the new regulations may have broader implications for the UAE’s economy. Heaver emphasized that the country has historically attracted foreign investment due to its liberal economic policies. These new rules could deter investors who are interested in the crypto and Web3 sectors.
Heaver expressed concerns about the new development’s alignment with the UAE’s economic principles and its impact on foreign investment inflow. Above all, by prohibiting the use of stablecoins, the regulations could make the UAE a less attractive destination for investment in the digital economy.
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