Newly-released regulations in the United Arab Emirates (UAE) might lead to a ban on crypto payments, according to Irina Heaver, a prominent crypto and blockchain lawyer.
On June 5, the Central Bank of the United Arab Emirates (CBUAE) discussed projects under the country’s financial infrastructure (FIT) program, aimed at promoting digital transformation. During the meeting, the board approved regulations for payment token services, including stablecoins. These guidelines state that payment tokens in the UAE must be backed by UAE dirhams and cannot be linked to other currencies.
UAE lawyer Irina Heaver, who spoke with Cointelegraph, expressed concerns that these rules effectively ban crypto payments within the country. She explained that the CBUAE is prohibiting the acceptance of cryptocurrencies for goods and services unless they are licensed dirham payment tokens or registered foreign payment tokens, neither of which currently exist.
This development, according to Heaver, might contradict the UAE’s traditionally pro-commerce and pro-investment stance. Historically, the UAE has thrived on foreign direct investment due to its liberal policies, including the absence of capital controls and the freedom of contract under commercial law. This freedom allowed parties to agree on their transaction terms, including payment methods and currencies.
Heaver also highlighted concerns about the new regulations’ alignment with the country’s economic principles and their potential impact on foreign investment. She emphasized that Tether has been crucial for transactions in the Web3 and crypto space, and restricting stablecoins could hinder the sector’s development in the UAE.
“This policy shift could signal a less favorable environment for the crypto industry, which is not beneficial for the UAE’s image or its ambitions in the digital economy,” Heaver noted.
Additionally, Heaver pointed out the lack of industry representation in the UAE, which she believes is a significant disadvantage. Unlike Switzerland’s Crypto Valley Association, which lobbied against unfavorable regulations, the UAE lacks a united voice to advocate for the crypto industry’s interests. This absence means there is no one to counter policies that might be detrimental to the growth of Web3 and crypto in the country.
Receive intel reports across 15+ web3 sectors daily –early access.