The Central Bank of the United Arab Emirates has moved to clarify recent regulations released on January 1, 2017, that claimed “all virtual currencies are prohibited”. Now, the monetary authority has confirmed that new regulations will not outlaw virtual currencies like Bitcoin.
On January 1, the Central Bank of the UAE released a new regulatory framework [PDF] for electronic payment systems. In a marked provision toward virtual currencies specifically, the regulation simply stated: “All virtual currencies (and any transactions thereof) are prohibited.”
The sweeping statement that constitutes a ban on the use of digital currencies like bitcoin crept under the radar, relatively speaking, at a time when the UAE is pressing ahead with its Fintech-friendly agenda. Recent efforts include setting to path a comprehensive switchover to blockchain-based document storage for all Government documents by the year 2020.
However, the central bank’s Governor, Mubarak Rashid Khamis Al Mansouri clarified the regulatory moves, explicitly stating that bitcoin or other virtual currencies do not fall under the new regulation.
In a statement to regional news outlet Gulf News, the official stated:
[T]hese regulations do not cover ‘virtual currency’, which is defined as any type of digital unit used as a medium of exchange, a unit of account, or a form of stored value. In this context, these regulations do not apply to bitcoin or other crypto-currencies, currency exchanges, or underlying technology such as Blockchain.
Evidently, the Fintech-forward stance taken by authorities sees bitcoin and other virtual currencies pinned alongside the development of blockchain technology, which enthusiasts will find encouraging.
Still, the Central Bank official added that regulatory oversight over virtual currencies are currently in consideration under review, with regulations likely to follow at some point in the future.
The clarification should come as relief to the still-nascent bitcoin industry in the region.
Speaking to the publication, Ola Doudin, co-founder and CEO of BitOasis, the UAE’s first bitcoin exchange, stated:
We’re very glad to hear the Governor’s statement on virtual currencies, bitcoi nadn blockchain in light of the recent PSP regulations, and we’re optimistic about the direction the Central Bank is taking to support innovation in Fintech.
BitOasis, which provides a wallet and exchange platform for bitcoin users in the MENA (Middle East and North Africa) region gained seed funding in mid-2016 saw an official launch in Dubai, come September. The Governor’s clarification will also please bitcoin wallet provider Blockchain, which has pinned an expansion effort, with investments, in the region.
The legality and legislation of bitcoin have already been discussed by authorities in Dubai. The Dubai Electronic Security Center (DESC) held a workshop with the Supreme Legislation Committee (SLC) of Dubai in November, focusing on future legislative policies and legal frameworks surrounding bitcoin.
If the recent trend of encouraging innovation and new financial technologies like bitcoin and blockchain is to continue, the UAE could soon establish a Fintech-friendly regulatory framework.
DESC executive director Yousef Al Shaibani stated at the time:
This reflects our belief that the emirate of Dubai and the United Arab Emirates should be among the first in the region and the world to establish a legislative framework and a financial and organizational structure for this technology, with the participation of all competent authorities in the emirate and the UAE.
Featured image from Shutterstock.