The Dubai International Financial Centre (DIFC), a special economic zone with a population of over 5,000 residents, has recently introduced a new digital assets law and security law, as well as amendments to existing legislation. The DIFC operates under its own legal system, which is based on English law.
These legislative developments aim to keep up with the fast-paced advancements in international trade and financial markets, while also providing legal certainty for investors and users of digital assets, according to a statement by Jacques Visser, the Chief Legal Officer of the DIFC Authority.
The Digital Assets Law consists of seven pages of text and additional appendices. Although a law amending multiple previous laws to accommodate digital assets has been passed, it is not currently available online. The DIFC has stated that the changes made to the Law of Obligations now consider electronic records to be functionally equivalent to paper records.
Furthermore, the Security Law 2024, which is a more extensive piece of legislation, has replaced a 2005 law and its 2019 amendment. It incorporates the Financial Collateral Regulations and is based on the United Nations Commission on International Trade Law’s Model Law on Secured Transactions. The DIFC emphasizes that the new law aligns with international best practices.
In 2022, the DIFC updated its cryptocurrency regulations, and in 2023, it began subsidizing licenses for artificial intelligence and Web3 companies. The DIFC experienced a significant increase in net profit, reaching $203 million, a 45% rise from the previous year. Additionally, there was a 34% growth in new registrations, including a notable presence of hedge funds and an influx of businesses from Europe and the United States.
While the new Digital Assets Law is considered to be groundbreaking, it is not the first jurisdiction to address the classification of cryptocurrencies as property. Courts in China, Singapore, and Hong Kong have previously issued rulings on digital assets as property.
For more information on Dubai’s crypto landscape, refer to the article “Crypto City: Guide to Dubai” in the magazine.