Dubai, the emerging global hotspot for Web3 activities and businesses, has taken another crucial step to make things more lucrative for interested folks. A layer of regulations dedicated to overseeing the Web3 sector, has been laid upon the Dubai International Financial Centre (DIFC). This special economic freezone located in Dubai, was put in place in 2004. This freezone works under the Dubai Financial Services Authority – which is an independent regulator exclusive to the DIFC. With an influx of Web3 firms in Dubai, the regulator felt an immediate need to bring-in some new laws.
Called the Digital Assets Law, this legislation adds some new Web3-centric rules while also making changes to existing laws around contracts, obligations, security, damages, remedies, and foundations.
“DIFC is excited to announce the enactment of its Digital Assets Law. We consider this legislation to be groundbreaking as the first legislative enactment to comprehensively set out the legal characteristics of digital assets as a matter of property law, and to provide for how digital assets may be controlled, transferred and dealt with by interested parties,” said Jacques Visser, Chief Legal Officer at DIFC Authority while commenting at the development.
In recent times, the DIFC has been gearing to see a boom in Web3 firms entering the economic freezone. Last year in August, the DIFC decided to subsidise 90 percent of licencing cost for Web3 and AI firms.
Hence, the newly enacted laws levied by the DIFC outlines the ways in which digital assets like cryptocurrencies and NFTs would be monitored, transferred, and dealt with by industry participants operating out of the DIFC freezone.
As per Visser, this is the first legislative in the UAE that comprehensively set out the legal characteristics of digital assets including them under the property law provisions.
“The legislative enactments aim to ensure DIFC Laws keep pace with the rapid developments in international trade and financial markets arising from technological developments, and to provide legal certainty for investors in, and users of, Digital Assets,” the DIFC authorities noted in the official announcement post that further provides details on the amended rules.
Dubai is often touted as the home of Web3 and several emerging technologies. Back in 2022, the crypto sector in Dubai fell under a set of new regulatory framework. At the time, the UAE had also established Virtual Asset Regulatory Authority (VARA) — which is an independent body to oversee the governance of the crypto space. This law, however, did not apply to the DIFC because the freezone has its own governing body.