i INTRODUCTION TO THE LEGAL AND REGULATORY FRAMEWORK

The United Arab Emirates (UAE) is a developing legal system that has rapidly modernised in recent years. The overall legal system is a civil law system influenced by shariah (Islamic law), of which the major legal codes include the civil transactions law, the commercial transactions law, the penal code and the commercial companies code. In addition to UAE federal law, each of the seven emirates of the UAE (Dubai, Abu Dhabi, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah) have their own laws and regulations in areas where there is no federal law. In the field of financial and capital markets, the UAE Central Bank and the Securities and Commodities Authority (SCA or Authority) are, however, the federal regulators.

Each emirate also has its own free zones, which have limited independence from the emirate and federal law that applies to foreign investment restrictions and customs. There are, however, two financial free zones established pursuant to the UAE Constitution and federal law that are entirely separate jurisdictions in the sense that they have a regime of civil and commercial laws separate from the remainder of the UAE. The two free zones are the Dubai International Financial Center (DIFC), where the regulator is the Dubai Financial Services Authority (DFSA), and the Abu Dhabi Global Market (ADGM), where the regulator is the Financial Services Regulatory Authority (FSRA). The DIFC applies a common law system modelled on English common law, while the ADGM applies English common law itself. UAE federal criminal laws do, however, apply in the DIFC and the ADGM (for example, the federal anti-money laundering laws). Where necessary, we deal with onshore UAE, the DIFC and the ADGM separately in this chapter.

Although distributed ledger technology is presented as a government priority, the regulation of virtual currencies in the UAE remains limited, apart from in the ADGM, which has recently issued extensive regulation. Although virtual currencies are not prohibited, the SCA and the DFSA have issued circulars to caution investors on virtual currencies, without however taking a firm regulatory position.

ii SECURITIES AND INVESTMENT LAWS

i Onshore UAE

In onshore UAE, the UAE Central Bank and the SCA share responsibility for the regulatory oversight of UAE's financial and capital markets. This includes the non-financial free zones, such as the Dubai Multi Commodities Centre (DMCC) and the Dubai Silicon Oasis (DSO).

Although the SCA announced on 9 September 2018 that it would issue a regulation to govern ICOs and determine the status of coins and tokens in mainland UAE, at the time of writing, neither the Central Bank nor the SCA have issued or amended any securities, financial, investment or commodities laws to take account of the rise of virtual currencies. However, depending on the technology underlying or rights attaching to a coin or token, UAE securities, investment or financial laws may potentially apply. Persons or entities issuing or dealing in or with tokens should exercise caution, particularly following the SCA's warning in a circular of 3 February 2018: while the primary focus of the circular was cautionary and mainly focused on initial coin offerings, it is noteworthy that the SCA requested all issuers, intermediaries facilitating initial coin offerings and trading platforms to ensure that they comply with all applicable laws.2

Securities and related investments are primarily governed by Federal Law No. 4 of 2000 Concerning the Emirates Securities and Commodities Authority and Market (Securities Law),3 and regulations issued thereunder and relating thereto.4 The Securities Law established the SCA as a second federal regulator and includes basic rules on the offering of securities.5 Under the Securities Law, any securities or commodities market or exchange must be in the corporate form of a local public institution or public corporation and must be licensed by the SCA.6 This requirement was relaxed in 2014, permitting the listing of securities in private joint-stock companies on regulated exchanges.7 The licensing requirement also applies to brokers. The Securities Law and (most) regulations issued thereunder define Securities as 'shares, bonds and notes . . . and any other domestic or non-domestic financial instruments accepted by the Authority'.8 The definition leaves room for the Authority to subsume virtual currencies or tokens within its definition. The Law defines commodities as 'Agricultural produce and natural resources extracted from under the ground and the seas after being processed and prepared for commercial use', which would not appear to cover virtual currencies. However, later regulation defines commodities to include 'and any other commodities traded in contracts'.9

Highly relevant to trading platforms of virtual currencies, the activity of market making requires a licence from the SCA. Market making is defined as 'the activity which mainly depends on providing continuous prices for the purchase and sale of certain securities to increase the liquidity of such securities'.10 Where tokens are considered securities, the provision of trading bots to ensure liquidity of the token may therefore potentially amount to a regulated activity in onshore UAE.

ii DIFC

The DFSA, the DIFC's competent regulator, has stated that it currently does not regulate digital tokens and considers them to be high risk. 11 It also currently does not license any firms in the DIFC to carry out activities related to virtual currency investments.

The core laws regulating licensable businesses in the DIFC and administered by the DFSA are:

  1. the Regulatory Law 2004;
  2. the Markets Law 2012;
  3. the Law Regulating Islamic Financial Business 2004;
  4. the Collective Investment Law 2010; and
  5. the Investment Trust Law 2006.12

The DFSA has issued a Rulebook that contains subsidiary legislation made under the Regulatory Law 2004 by the board of directors of the DFSA.13

The DIFC prohibits people from performing financial services, including dealing in and advising on investments such as securities and derivatives, unless authorised to do so.14 An activity constitutes a financial service under the Regulatory Law 2004, subject to various exemptions, if it amounts to:

  1. accepting deposits;
  2. providing credit;
  3. providing money services;
  4. dealing in investments as principal;
  5. dealing in investments as an agent;
  6. arranging deals in investments;
  7. managing assets;
  8. advising on financial products;
  9. managing a collective investment fund;
  10. providing custody;
  11. arranging custody;
  12. effecting contracts of insurance;
  13. carrying out contracts of insurance;
  14. operating an exchange;
  15. operating a clearing house;
  16. insurance intermediation;
  17. insurance management;
  18. managing a profit-sharing investment account;
  19. operating an alternative trading system;
  20. providing trust services;
  21. providing fund administration;
  22. acting as the trustee of a fund;
  23. operating a representative office;
  24. operating a credit rating agency;
  25. arranging credit and advising on credit; and
  26. operating a crowdfunding platform.15

The DIFC also prohibits financial promotions, which covers any communication 'which invites or induces a Person to (a) enter into, or offer to enter into, an agreement in relation to the provision of a financial service; or (b) exercise any rights conferred by a financial product or acquire, dispose of, underwrite or convert a financial product'.16

While there is extensive room for virtual currency transactions to fall within financial services or promotions, the statement of the DIFC indicates that at this point in time it does not consider the issuance of or dealing in digital tokens to fall within its wide regulatory framework.

iii ADGM

The competent regulator in the ADGM is the FSRA. The FSRA has recently issued a far-reaching framework regulating ICOs and tokens as crypto assets.

The FSRA prohibits dealing in and advising on securities unless authorised or exempt. As further expanded on in Section VII, the FSRA has stated that tokens may be classified as securities, units in a collective investment fund or commodities, depending on the kind of rights the holder would be granted. 17 Where the FSRA classifies tokens as security or units in a collective investment fund, dealing in them and their issuance must fully comply with the Financial Services and Market Act (as amended) (FSMR) and ancillary rules issued by the FSRA. This particularly applies to initial coin offerings, token generation events or token sales (together, ICOs), however called.

Tokens that are merely commodities remain unregulated by the FSRA. However their derivatives, including futures, options or contracts for difference, are regulated as specified investments under the FSMR and must comply with all requirements thereunder.

iii BANKING AND MONEY TRANSMISSION

The Central Bank is the UAE's banking, credit and monetary regulator, and:

  1. provides general regulation of banking-related matters;
  2. oversees the issuance of currency;
  3. supervises banking;
  4. advises the government on financial issues;
  5. maintains foreign exchange reserves; and
  6. acts as a bank for the government and other banks in the UAE.

Federal Law No. 10 of 1980 concerning the Central Bank, the Monetary System and the Organization of Banking is the main legal framework for banking in the UAE.18

In January 2017, the Central Bank issued the regulatory framework for stored values and electronic payment systems (Stored Value Regulation) to regulate different types of electronic payments and stored value.19 The Stored Value Regulation applies in the UAE but does not apply in the DIFC and the ADGM. The Regulation defines virtual currencies as 'any type of digital unit used as a medium of exchange, a unit of account, or a form of stored value'.20 The definition goes on to stipulate that the virtual currencies are not covered by the Stored Value Regulation, and then confusingly suggests later that their usage (and any transactions with them) is prohibited.21 In February 2017, the Central Bank Governor reportedly clarified that it is not prohibiting virtual currency transactions, and that they do not fall under the Stored Value Regulations.22

Local banks in the UAE have adopted inconsistent and changeable restrictions on remitting funds to or receiving funds from cryptocurrency exchanges, typically without prior notice. The basis for such restrictions is typically the know your customer (KYC) and anti-money laundering (AML) obligations applicable to banks (as further considered in Section IV). In May 2018, BitOasis, a virtual currency exchange serving UAE customers, suspended fiat-to-crypto transactions on its trading platform due to issues with its bank.23 In June 2018, the company was able reinstate that feature.24 As is the case elsewhere in the world, UAE banks have hesitated opening bank accounts for blockchain companies.

iv ANTI-MONEY LAUNDERING

The UAE has enacted numerous laws at the federal level to prevent and criminalise money laundering and the financing of terrorism. The main piece of legislation is Federal Law No. 4 of 2002 concerning Combating Money Laundering and Terrorism Financing Crimes (AML Law), which applies in all emirates. The AML Law defines the crimes of money laundering and terror financing and details the sanctions for such activities. It was brought into better alignment with the Financial Action Task Force's Recommendations through an amendment in 2014 by Federal Law 9 of 2014.25 Additionally, Law No. 7 of 2014 addresses the combating of terrorism crimes.26 Cabinet Resolution No. 38 of 2014 includes a comprehensive set of regulatory arrangements for AML and counter-terrorist financing (CTF) applicable in the UAE.27

The main money laundering offence is defined in Article 2 of the AML Law, which renders a person a perpetrator of money laundering who, while being fully aware that such funds are derived from an offence or a misdemeanour:

1. converts, transfers, deposits, saves, invests, exchanges or manages any proceeds, with intent to conceal or disguise the illicit origin thereof, 2. conceals or disguises the true nature, origin, location, way of disposition, movement, rights related to any proceeds or ownership thereof, or 3. acquires, possesses or uses such proceeds.

For the purposes of virtual currencies, it is important to note that funds refers to any assets including assets in digital or electronic form.28

Virtual currencies are therefore likely to fall within the scope of the UAE's AML/ CFT regime.

Sanctions for money laundering include prison sentences of up to 10 years, monetary fines for individuals of between 100,000 dirhams and 500,000 dirhams, and for entities of between 300,000 dirhams and 1 million dirhams, as well as forfeiture of funds and assets tainted by association.29 Forfeiture also applies to virtual currencies. Assets tainted by association have to be forfeited. Again, while virtual currencies are not specifically mentioned in the legislation, any virtual funds will be considered assets the court may confiscate if those funds are tainted by money laundering.

Failing to report a suspicious activity is also criminalised under the AML Law, and broadly applies to financial institutions or other financial, commercial and economic establishments that are aware of any offence but fail to report it. The term other financial, commercial and economic establishments is defined as establishments licensed and supervised by departments other than the Central Bank or the SCA.30 The definition is further defined in Cabinet Resolution 38, being establishments licensed and controlled by entities other than the SCA and the Central Bank of the United Arab Emirates (CBUAE), including non-financial activities and professions such as real estate brokers, jewellery and precious metals and stone traders, lawyers, legal consultants, private and public notaries, and accountants.31 The definition is non-exhaustive, and may be wide enough to cover establishments dealing in or with virtual currencies, including blockchain ventures structured as foundations. Penalties include prison, with no minimum or maximum term specified, a fine of between 50,000 dirhams and 300,000 dirhams, or both. Other criminal offences include tipping off any person being scrutinised for possible involvement in suspicious activities, failure to disclose or making a false suspicious activity report.32

Cabinet Resolution 34 establishes a National Anti-Money Laundering Committee and appoints control authorities to enforce compliance with the AML Law within their respective jurisdiction.33 These include, among others, the CBUAE, which operates an Anti-Money Laundering and Suspicious Cases Unit for financial institutions, the DMCC Authority within its free zone, the DFSA in the DIFC and the FSRA in the ADGM.34

i DIFC

AML/CTF requirements and sanctions that go beyond those contained in AML Law are contained in Part IV of the Regulatory Law and the AML Module of the DFSA Rulebook.35 The Rulebook applies to authorised firms (other than credit rating agencies), authorised market institutions, designated non-financial businesses or professions, and auditors. Were a blockchain or virtual currency businesses to be licensed by the DFSA, it would be obliged to comply with its DFSA AML Module, which includes extensive customer due diligence and continuing AML monitoring. Permissionless decentralised cryptocurrency exchanges may have difficulty complying.

ii ADGM

The FSRA has issued an AML Rulebook, which complements the federal regulations and puts more detailed requirements on regulated entities, including risk-based KYC and AML requirements.36 The Rulebook applies to all FSRA-regulated entities, including those to be regulated under the recently issued amendments to the FSMA relating to crypto assets.37

v REGULATION OF EXCHANGES

i Onshore UAE

At the time of writing, the SCA has not issued any regulations specifically addressing cryptocurrency exchanges and no cryptocurrency exchange fully operated out of the UAE. BitOasis, which was marketed as the 'first cryptocurrency exchange in the Middle East', was originally incorporated as an entity in the DSO, a Dubai free zone. BitOasis thereafter transferred to an entity incorporated in the British Virgin Islands. The DSO entity remains as an operational support entity. In May 2018, Palmex, a crypto-to-crypto exchange operated out of the DSO by ArabianChain Technology FZCO, the company behind DubaiCoin, was issued with a sandbox licence by the Central Bank of Bahrain (CBB). 38 The licence allows it to operate under the CBB's sandbox framework, which requires adherence to CBB regulations on confidentiality of customer information, KYC, AML and CFT.

In December 2017, the DMCC announced that it added proprietary trading in crypto commodities as a licensable regulated activity.39 The DMCC has stated that it considers virtual currencies a commodity, and therefore considers activity concerning them to be within the free zone's jurisdictional and regulatory scope. Such licence is restricted to buying and selling of crypto commodities on a licensee's own account. Importantly, it does not allow the holder of such licence to act as a cryptocurrency exchange. However, such licence appears to be suitable for the operation of trading bots that ensure liquidity on a trading platform. We are aware that at least one licence application to that effect has been made by an interested blockchain venture. To receive a licence, an applicant must have a minimum issued share capital of 50,000 dirhams, present a business plan and reply to a questionnaire. In spring, the DMCC issued a licence to Regal RA DMCC (Regal), a precious metal trader incorporated in the DMCC.40 Regal provides physical (cold) storage of virtual currencies it considers commodities on behalf of clients in its headquarters' vault.

ii DIFC

Although the DIFC is home to NASDAQ DUBAI, one of the largest stock exchanges in the Middle East, and Dubai Mercantile Exchange, a major energy futures and commodities exchange, the DFSA has thus far not issued regulations specifically addressing virtual currency exchanges. Nor has it issued any licences to businesses operating to that effect.

Operating an exchange, a multilateral trading facility or an alternative trading platform are, among other things, licensable activities in the DIFC, and are regulated. However, given the DFSA announcement that it does not currently regulate tokens, operating a virtual currency platform does not appear to fall within any such definition.

iii ADGM

In contrast to onshore UAE and the DIFC, a business must be licensed to operate a cryptocurrency exchange in the ADGM if such exchange's activities fall within the ambit of operating a crypto asset business under the regulations and guidance issued by the FSRA in June 2018.41 The Financial Services and Markets (Amendment) Regulation 2018 defines a regulated crypto asset business to include operating a crypto asset exchange trading, converting or exchanging fiat currency or other value into accepted crypto assets, accepted crypto assets into fiat currency or other value, or one accepted crypto asset into another accepted crypto asset.

The ADGM thus regulates both fiat-to-crypto and crypto-to-crypto exchanges. Importantly, however, the transmission of crypto assets is specifically excluded from the ambit of crypto asset business.42 Accordingly, dependent on the structure of an exchange, some decentralised non-custodial exchanges appear to fall outside the definition.

The Regulation allows crypto asset exchanges to trade in what is termed accepted crypto assets only. Which virtual currencies are accepted crypto assets is decided by the FSRA.43 This could potentially pose an issue to permissionless decentralised exchanges that have no control over which specific virtual currencies are traded on their decentralised trading protocols, but are found by the regulator to operate in the ADGM. The Regulation envisages a licensed crypto asset exchange to be regulated like a multilateral trading facility, and is required to have in place the full gamut of oversight processes, such as:

  1. market surveillance;
  2. KYC/AML;
  3. settlement processes;
  4. transaction recording;
  5. transparency and public disclosure mechanisms; and
  6. exchange-like operational systems and controls.44

Businesses hoping to operate a crypto asset out of the ADGM must pay an initial application fee of US$125,000 and an annual supervision fee of US$60,000.45 Where the crypto asset exchange also operates other licensable business, the fee is cumulative.

At the time of writing, no business had been issued a licence to operate a crypto asset exchange in the ADGM.

vi REGULATION OF MINERS

The mining of virtual currencies is not a regulated practice in the UAE, or in any of the free zones within the UAE. The activity of mining is also not covered in any previous legislation that would be applicable.

Even within the ADGM, the FSRA does not consider the mining of cryptocurrencies to be a regulated activity. The amended FSMA specifically excludes 'the development, dissemination or use of software for the purpose of creating or mining a Crypto Asset' from its regulated activities. 46

vii REGULATION OF ISSUERS AND SPONSORS

i Onshore UAE

On 9 September 2018, the SRA announced that the issuance of a regulation governing ICOs was imminent. At the time of writing, however, no explicit regulation had been issued. In its warning issued in February 2018, the SCA reiterated that it does not regulate, mandate or recognise any ICO.47 At the same time, it urged that 'all issuers of digital tokens, intermediaries facilitating or advising on an offer of digital tokens, and platforms facilitating trading in digital tokens should therefore seek independent legal advice to ensure they comply with all applicable laws, and consult SCA where appropriate'.48

In the UAE, as in other jurisdictions, ICOs could be deemed to amount to a sale of a security, units in investment funds, commodities or other assets, depending on the underlying technology or rights attaching to the token. Where tokens have features similar to securities, ICOs can be anticipated to be subject to onshore UAE securities laws and would have to be licensed by the SCA.

ii DIFC

The DFSA has also taken a wait-and-see approach to explicitly regulating the issuance of ICOs and their issuers and sponsors. In September 2017, the DFSA issued a warning to investors and clarified that 'it does not currently regulate these types of product offerings or license firms in the Dubai International Financial Centre (DIFC) to undertake such activities'.49

iii ADGM

In October 2017, the FSRA issued guidance applicable to those considering an ICO or transacting in virtual currencies.50 The FSRA clarified that it would consider on a case-by-case basis whether an ICO was to be regulated under the FSMR.51 This would be the case where the FSRA determines that tokens to be issued granted the holder rights that are similar to those that are usually given to shareholders, bondholders or a participant in a fund. In that case, the FSRA considers tokens to be securities, and an ICO must comply with the FSMR if it is issued to the public in or from the ADGM.52 Accordingly, where an ICO is issued abroad but offered to the public in the ADGM, a decision by the FSRA needs to be sought, unless buyers located in the ADGM are excluded from participation.

Further, a FSRA decision to consider a token to be a security triggers the prospectus obligations under Section 61 of the FSMR, other obligations under Chapter 4 of the FSMR Markets Rules, as well as AML and KYC requirements. The usual prospectus exemptions may apply where an offer is only made to professional clients (as defined in the FSMR) or fewer that 50 persons in any 12-month period, or where the consideration to be paid by a single person to acquire tokens is at least US$100,000.53

Classification as a security token also triggers requirements for market intermediaries or operators, such as virtual currency exchanges, who trade in those tokens, to be regulated as financial services permission holders, recognised investment exchanges or recognised clearing houses.54 Additionally, the FSRA may consider tokens used by firms to build an investment fund on the blockchain as units in a collective investment fund (as defined in Section 106 of the FSMR) to which the ADGM's fund rules apply. This classification also triggers extensive regulatory requirements.

Where the FSMR does not consider tokens to be securities, the ICO is unlikely to constitute a regulated activity under the FSMR.

viii CRIMINAL AND CIVIL FRAUD AND ENFORCEMENT

Various UAE authorities have raised concerns about fraud related to cryptocurrency transactions.

The SCA has warned UAE residents about and advised them to avoid trading in virtual currencies. The DFSA has advised potential investors to exercise caution and undertake due diligence to understand the risks involved.55 One reason for the FSRA's decision to regulate crypto assets was to prevent significant financial crimes and other risks.56

In the past year, reports have surfaced about virtual currency-related frauds in the UAE, mainly in relation to over-the-counter transactions to buy and sell virtual currencies,57 and about the embezzlement of cryptocurrencies by an employee of a cryptocurrency exchange.58 We are also aware of instances where UAE commercial banks have halted cryptocurrency-related transactions pending approval from the UAE Central Bank.

Owing to a lack of legislation on the federal level, there are no specific criminal or civil penalties in place for the misuse of cryptocurrencies in onshore UAE or the DIFC, outside of the scope of standard criminal provisions such as fraud, embezzlement, theft, money laundering and cybercrime. In the FSRA, operators of a crypto asset business may be found guilty of the full gamut of financial crimes and administrative offences and misdemeanours, including market abuse, and making misleading statements and impressions.59

ix TAX

The UAE established the Federal Tax Authority in 2016, introduced an excise tax on certain goods in October 2017, and introduced a value added tax on all good and services in the UAE, with some limited exemptions, from January 2018.60 A sale of virtual currencies could be a taxable transaction under the value added tax laws, but the Federal Tax Authority has not issued any regulations on virtual currencies.

There is no corporate or income tax in the UAE. There are also no withholding tax or foreign exchange controls that impact cross-border payments involving virtual currencies.

x LOOKING AHEAD

A major topic in the UAE is the different regulatory positions that will be adopted by the UAE federal regulators (the UAE Central Bank and the SCA) and free zone regulators (the DFSA and the FSRA). With the popularity of the usage of virtual currencies rising in the Middle East, and the aspiration of the UAE to be at the forefront of new business regulations, we anticipate that the UAE will seek to adopt regulatory measures that are perceived as being pro-business. Regulators in the UAE are most likely to follow standards developed by international best practices.

The SCA has announced the formation of a FinTech team for the purpose of implementing FinTech initiatives and updating the SCA with the latest FinTech developments.61 The SCA is expected to issue a regulation on ICOs in autumn 2018. Moreover, the Dubai government has launched the Dubai Blockchain Strategy, under which blockchain technology is being studied and assessed in order to make all transactions with governmental authorities accessible via blockchain online by 2020.62 Using such technology will be cost effective and more efficient for all the parties involved. It was recently announced that the DIFC was exploring ways to transform into a blockchain-powered judiciary.63 Since the government's main goal is a high level of customer satisfaction across the board, it will prioritise exploring such technology, which will trigger the need for also developing respective regulations.


Footnotes

1 Silke Noa Elrifai is of counsel and Christopher Gunson is a partner at Amereller.

2 SCA, Public Warning Statement on Initial Coin Offerings (ICO) (3 February 2018), available at https://www.sca.gov.ae/English/Opendata/pages/warning/4.aspx (last accessed 5 August 2018).

3 Federal Law No. 4 of 2000 Concerning the Emirates Securities and Commodities Authority and Market (Securities Law) available in Arabic at http://www.dubaided.ae/English/DataCenter/BusinessRegulations/pages/federallaw4of2000.aspx (last accessed 5 August 2018) .

4 See, for example, Council of Ministers' Decision No. 12 of 2000 concerning the Regulations as to the Listing of Securities and Commodities; Council of Ministers Decision No. 3/R of 2000 concerning the Regulations as to Disclosure and Transparency; UAE Central Bank Board of Directors' Resolution No. 164/8/94 regarding the Regulation for Investment Companies and Banking, Financial and Investment Consultation Establishment or Companies; Federal Law No. 2 of 2015 concerning Commercial Companies; Administrative Decision No. 3/RT of 2017 regulating venture capital funds; SCA Board of Directors Decision No. 1 of 2014 concerning the Regulation of Investment Management; SCA Board of Directors Decision No. 27 of 2014 on the Regulation of Securities Brokerage; and SCA Board of Directors Decision No. 18 of 2015 Amending Certain Articles of the Regulation as to Disclosure and Transparency;

5 Article 2, Securities Law.

6 Article 20, Securities Law.

7 SCA Board of Directors Decision No. 10 of 2014 Concerning the Regulation of Listing and Trading of Shares of Private Joint Stock.

8 Article 1 (Definitions), Securities Law.

9 See, for example, SCA Board Decision No. (157/R) of 2005 Concerning The Regulations As To Listing And Trading Of Commodities And Commodities Contracts available at https://www.sca.gov.ae/mservices/api/regulations/GetRegulationByIdAsPdf/105 (last accessed 5 August 2018).

10 SCA Board Decision 46 of 2012 concerning the regulations as to Market Makers.

11 DFSA, DFSA Issues General Investor Statement on Cryptocurrencies (13 September 2017), available at https://www.dfsa.ae/MediaRelease/News/DFSA-Issues-General-Investor-Statement (last accessed 5 August 2018).

12 DFSA administrative laws available at http://dfsa.complinet.com/en/display/display.html?rbid=1547&record_id=7475 (last accessed 5 August 2018).

13 DFSA rules available at http://dfsa.complinet.com/en/display/display.html?rbid=1547&record_id=1840 (last accessed 5 August 2018).

14 Article 41, DIFC Law No.1 of 2004 (Regulatory Law).

15 DFSA General Rules, Rule 2.2.1 available at http://dfsa.complinet.com/net_file_store/new_rulebooks/d/f/DFSA1547_1843_VER420.pdf (last accessed 5 August 2018).

16 Article 41A, the Regulatory Law.

17 Christopher Gunson, Kilian Bälz and Silke Elrifai, Client Alert: The Current Legal Status of Cryptocurrencies, Initial Coin Offerings and Distributed Ledger Technology in the UAE (Dubai and Abu Dhabi) (Amereller, 9 March 2018) http://amereller.com/wp-content/uploads/2018/03/20180309-UAE-Cryptocurrency-Law-Article.pdf (last accessed 2 August 2018).

18 Federal Law No. 10 of 1980 concerning the Central Bank, the Monetary System and Organization of Banking available at https://www.centralbank.ae/pdf/OffGazetteB.pdf (last accessed 5 August 2018).

19 UAE Central Bank, Regulatory Framework for Stored Values and Electronic Payment Systems (1 January
2017), available in English translation at https://www.centralbank.ae/en/pdf/notices/Regulatory-Framework-For-Stored-Values-And-Electronic-Payment-Systems-En.pdf (last accessed 5 August 2018).

20 Ibid., A.1.

21 Ibid., D.7.3.

22 Gulf News, 'UAE Central Bank clarifies virtual currency ban', available at https://gulfnews.com/business/sectors/banking/uae-central-bank-clarifies-virtual-currency-ban-1.1971802 (last accessed 5 August 2018).

23 Gulf News, 'BitOasis confirms suspension of dirham transactions from June 4', (20 May 2018) available at https://gulfnews.com/business/sectors/technology/bitoasis-confirms-suspension-of-dirham-transactions-from-june-4-1.2224349 (last accessed 5 August 2018).

24 Arabian News, 'Dubai crypto exchange BitOasis reinstates AED deposits and withdrawals' (4 June 2018), available at https://www.arabianbusiness.com/banking-finance/398141-dubai-crypto-exchange-bitoasis-reinstates-aed-deposits-withdrawals (last accessed 5 August 2018).

25 Federal Law 9 of 2014 (Amending Certain Provisions of Federal Law 4/2002 Concerning the Combating of Money Laundering Crimes).

26 Federal Law No. 7 of 2014 on combating terrorism offences available at http://www.ilo.org/dyn/natlex/docs/ELECTRONIC/98658/117474/F399649256/LNME-FED-LAW-7-2014.pdf (last accessed 5 August
2018).

27 Cabinet Resolution No. 38 of 2014 concerning the Executive Regulation of Federal Law No.4 of 2002 Concerning Anti-Money Laundering and Combating Terrorism Financing (Cabinet Resolution 38).

28 Article 1 Federal Law 9 of 2014.

29 Articles 13 and 14, Federal Law 4 of 2002 (as amended).

30 Article 2 (Definitions) Federal Law 4 of 2002 (as amended).

31 Article 1, Cabinet decision 38.

32 Article 16, 18, AML Law.

33 Article 1 (Definitions), Cabinet resolution 38.

34 See, for example, Section 7(6), Financial Services and Markets Regulations 2015, ADGM FSMR.

35 DFSA, The DFSA Rulebook Anti-Money Laundering, Counter-Terrorist Financing and Sanctions Module, available at http://dfsa.complinet.com/net_file_store/new_rulebooks/d/f/DFSA1547_20015_VER130.pdf.

36 FSRA, Anti‐Money Laundering and Sanctions Rules and Guidance (AML), available at http://adgm.complinet.com/net_file_store/new_rulebooks/a/m/AML_VER02_150617.pdf (last accessed on 5 August 2018).

37 FSRA, Guidance – Regulation of Crypto Asset Activities in ADGM (25 June 2018), available at https://www.adgm.com/media/304701/guidance-regulation-of-crypto-asset-activities-in-adgm-25th-june-2018-2.pdf  (last accessed 5 August 2018) (FSRA Crypto Asset Guidance), p. 8; see also Chapter 17.1.2 of the FSRA Conduct of Business Rulebook.

41 73B of Schedule 1, Financial Services And Markets (Amendment No 2) Regulations 2018 available at http://adgm.complinet.com/net_file_store/new_rulebooks/f/i/Financial_Services_and_Markets_Amendment_No_2_Regulations_25_June_2018.pdf (last accessed 5 August 2018).

42 32C(3) of Schedule 1, Financial Services And Markets (Amendment No 2) Regulations 2018.

43 258(1) Financial Services And Markets (Amendment No 2) Regulations 2018.

44 FSRA Crypto Asset Guidance.

45 FEES Rule 3.14.1 and FEES Rule 3.14.2; see also FSRA Crypto Asset Guidance, p. 34.

46 73C(2) of Schedule 1, Financial Services and Markets (Amendment No. 2) Regulation 2018.

47 SCA, Public Warning Statement on Initial Coin Offerings (ICO) (3 February 2018), available at https://www.sca.gov.ae/English/Opendata/pages/warning/4.aspx (last accessed 5 August 2018).

48 Ibid.

49 DFSA Issues General Investor Statement on Cryptocurrencies (13 September 2017), available at https://www.dfsa.ae/MediaRelease/News/DFSA-Issues-General-Investor-Statement.

50 FSRA, Supplementary Guidance – Regulation of Initial Coin/Token Offerings and Virtual Currencies under the Financial Services and Markets Regulations (October 2017), available at http://adgm.complinet.com/net_file_store/new_rulebooks/i/c/ICOs_and_Virtual_Currencies_Guidance_VER01.08102017.pdf (FSRA ICO Guidance).

51 Article 3.3, FSRA ICO Guidance.

52 Ibid.

53 Article 3.6, FSRA ICO Guidance.

54 Article 3.6, FSRA ICO Guidance.

55 See footnote 14.

56 FSRA Crypto Asset Guidance, p. 6.

57 Khaleej Times, 'Man arrested in UAE for Dh2 million Bitcoin fraud' (13 February 2018), available at https://www.khaleejtimes.com/news/crime/man-arrested-in-uae-for-dh2-million-bitcoin-fraud.

58 Khaleej Times, 'Dubai employee embezzles Dh800,000 in cryptocurrency fraud' (12 March 2018) available at https://www.khaleejtimes.com/news/crime/dubai-employee-embezzles-dh800000-in-cryptocurrency-fraud.

59 Section 92, 102, 103 FSMA (as amended).

61 See footnote 3.

62 'Dubai Blockchain Strategy' (Smart Dubai) https://smartdubai.ae/en/Initiatives/Pages/DubaiBlockchainStrategy.aspx accessed on 2 August 2018.

63 Arabian Business, 'Smart Dubai, DIFC Courts to launch world's first Court of the Blockchain' (30 July
2018), available at https://www.arabianbusiness.com/technology/401774-smart-dubai-difc-courts-to-launch-worlds-first-court-of-the-blockchain (last accessed 5 August 2018).