Irina Heaver, a lawyer specializing in crypto and blockchain, has expressed her concerns over newly released regulations in the United Arab Emirates (UAE) that could potentially ban crypto payments in the country.
During a meeting on June 5, the board of directors of the Central Bank of the UAE (CBUAE) discussed projects under the country’s financial infrastructure program, which aims to boost digital transformation.
In this meeting, the board approved the issuance of regulations for payment token services, which would oversee and license stablecoins. The guidelines state that payment tokens in the country must be backed by UAE dirhams and cannot be linked to other currencies.
Heaver believes that these new regulations effectively prohibit crypto payments within the UAE. According to her, the CBUAE regulations “prohibit 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 has raised concerns about its alignment with the country’s economic principles and its impact on foreign investment inflow. Heaver also emphasized the importance of stablecoins like Tether (USDT) in Web3 and crypto transactions, and believes that the new rules could hinder progress in the sector by prohibiting their use.
She added, “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 also noted that the UAE lacks industry associations like the Crypto Valley Association in Switzerland, which has successfully lobbied against unfavorable regulations. The absence of such representation means that there is no one to counter policies that may be detrimental to the growth of Web3 and crypto in the UAE.
Overall, Heaver’s concerns highlight the potential impact of these new regulations on the crypto industry in the UAE, and the need for stronger industry representation to ensure a favorable environment for its growth.