New regulations in the United Arab Emirates (UAE) could potentially ban crypto payments in the country, according to crypto and blockchain lawyer Irina Heaver. On June 5, 2024, the Central Bank of the UAE (CBUAE) discussed projects under the financial infrastructure (FIT) program, aiming to enhance digital transformation.
UAE may ban crypto payments, Here’s what Lawyer said
The board approved regulations for payment token services, focusing on stablecoins. These new rules state that payment tokens must be backed by UAE dirhams and cannot be linked to other currencies. Heaver said that these regulations effectively ban the use of cryptocurrencies for goods and services unless they are licensed dirham payment tokens
Historically, the UAE has been attractive to foreign investors due to its liberal policies, including the absence of capital controls and flexible commercial laws. This freedom allows parties to decide on transaction terms, including payment methods and currencies. Heaver expressed concerns that the new regulations might contradict these pro-commerce and pro-investment principles, potentially affecting foreign investment inflows.
Heaver also noted that stablecoins like Tether have been crucial for transactions in the Web3 and crypto sectors. She warned that the new rules might hinder the UAE’s progress in developing the digital economy by banning the use of stablecoins in transactions.
“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,” Heaver added.
Another issue highlighted by Heaver is the lack of industry associations in the UAE, similar to the Crypto Valley Association in Switzerland, which successfully lobbied against unfavorable regulations. She believes that the fragmented nature of existing associations in the UAE, which often focus on business development rather than advocacy, is a significant disadvantage. This fragmentation means there is no unified voice to challenge policies that could harm the growth of Web3 and crypto in the UAE.
Overview of the crypto market
In contrast, the overall cryptocurrency market is up by 0.65% in the last 24 hours. Top assets like Bitcoin (BTC), Ethereum (ETH), Solana (SOL), and BNB (BNB) experienced decent surges of 0.67%, 0.5%, 1.05%, and 1%, respectively, in the same period.
Although the market sentiment is quite bearish at this moment, investors and institutions are taking this as an opportunity to continuously accumulate or add altcoins to their holdings, as observed in a recent report by Todayq News on June 26, 2024.