Proposed regulatory framework for virtual currencies in the UAE

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On 1 January 2017, the Central Bank of the UAE (CBUAE) published a Regulatory Framework for Stored Values and Electronic Payment Systems. The Regulation also includes a section on virtual currencies which are defined as digital units used as a medium of exchange or form of stored value. Exceptions are made for loyalty schemes and other products.

One of the key issues that emerges from the Regulation is a sense of ambiguity in relation to the treatment of virtual currencies. The sole  reference made to virtual currencies outside of its definition is the following:

“All Virtual Currencies (and any transactions thereof) are prohibited”

The apparent straightforward nature of the statement is complex upon interpretation. In fact, firms including Latham & Watkins have stated that this position can indicate any one of three things. Firstly, that virtual currencies are excluded from regulation. Secondly, that licenced entities within the UAE are prohibited from dealing with virtual currencies. Thirdly, the regulation prohibits the use of virtual currencies altogether in the UAE.
For the moment, the positions of virtual currencies such as Bitcoin in the UAE seems to be contentious. Pending further clarification on this particular issue , the Bitlegal World Tracker will reflect this.