Is it Legal to Trade Cryptocurrency in the UAE?
Crypto money is not audited by any government agency and cannot be traded through any bank or financial institution, which brings with it various legal challenges. There are various regulations on coin trade in the UAE, but no clear taxation has yet been done.
The UAE Central Bank published “Regulatory Framework for Saved Values and Electronic Payment Systems” on 1 January 2017 to promote consumer protection and financial stability. However, on February 1, 2017, the UAE Central Bank President issued a statement noting that “these regulations do not apply to basic technologies such as exchange rate or block-chain with Bitcoin or other crypto-money”. This situation is already being examined by the Central Bank and new arrangements will be made depending on the development of the concept and acceptance rates. While the new regulations on cryptocurrencies are anticipated, the most important issue to consider is whether “Bitcoin is a currency or a Commodity?”
If Bitcoin is considered a commodity, then the UAE Securities and Commodity Authority may have jurisdiction over the local bitcoin exchanges and apply VAT to them. On the other hand if it is considered a currency, it is also possible that it will enter the regulatory authority of the UAE Central Bank. All this leads to question marks, however the UAE officials have not yet clarified their stance on the issue.
The launch of the Global Blockchain Council and the adoption of the Dubai Blockchain Strategy show that the Dubai government recognized the high potential of block-chain-based technologies.