The future of cryptocurrency payments in the United Arab Emirates (UAE) hangs in the balance following the release of new regulations from the Central Bank (CBUAE). While the regulations aim to oversee stablecoins, a leading crypto lawyer believes they could inadvertently ban all crypto payments within the country.
New Stablecoin Rules Raise Red Flags
On June 5th, the CBUAE board approved regulations for “payment token services,” a move seemingly designed to regulate and license stablecoins. These regulations, however, stipulate that all payment tokens in the UAE must be pegged to the local currency, the dirham, and cannot be linked to other currencies.
Irina Heaver, a prominent crypto and blockchain lawyer based in the UAE, interprets these regulations as a de facto ban on crypto payments. In her view, the CBUAE is essentially “prohibiting the acceptance of cryptocurrencies for goods and services” unless they are specifically licensed dirham-backed tokens, which currently don’t exist.
Contradiction with Pro-Business Stance?
Heaver further argues that these new regulations contradict the UAE’s well-established reputation for fostering foreign investment and commerce. Historically, the country has thrived on liberal policies, including the freedom to choose payment methods for transactions. Heaver suggests these new rules could stifle foreign investment and hinder the development of the Web3 and crypto sectors within the UAE.
Stifling Innovation and Investment?
Heaver also highlights the potential negative impact on Web3 development. Tether (USDT), a widely used stablecoin, has been a “backbone of transactions” in the space. By restricting stablecoin use, the UAE risks hindering its own ambitions to become a leader in the digital economy.
Also Read: Buckle Up, Crypto World: US Recognizes Token as Security in Landmark Fraud Case (Execs Jailed!)
Heaver Calls for Industry Representation
Heaver emphasizes the need for a stronger voice representing the UAE’s Web3 and crypto industry. Unlike countries like Switzerland with established industry associations, the UAE currently lacks a unified voice to advocate for its interests. This, Heaver argues, leaves the industry vulnerable to “not thoroughly considered” policies that could ultimately harm the growth of these sectors.
The future of crypto payments in the UAE remains uncertain. With the new regulations raising more questions than answers, the need for clear communication and collaboration between the CBUAE and the crypto industry is paramount. Only through open dialogue can both sides ensure that regulations promote innovation and responsible growth in the digital asset space within the UAE.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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