The Dubai International Financial Centre (DIFC), a specialized economic zone with over 5,000 residents, has announced the enactment of new legislation regarding digital assets and security, as well as amendments to existing laws. The center operates under its own legal system, based on English law.
These legislative developments aim to keep up with the rapid changes in international trade and financial markets, while also providing legal certainty for investors and users of digital assets, according to a statement from DIFC Authority’s chief legal officer, Jacques Visser.
The Digital Assets Law consists of seven pages of text, along with appendices. Additionally, a law that modifies at least six previous laws to adapt them for digital assets has been passed, although it is not currently available online. The DIFC highlighted in its statement that the changes to the Law of Obligations have made electronic records functionally equivalent to paper records.
In parallel, the Security Law 2024, which replaces a 2005 law and its 2019 amendment, has been implemented, incorporating the Financial Collateral Regulations into its provisions. The new law is modeled after the United Nations Commission on International Trade Law’s Model Law on Secured Transactions and aligns with international best practices, as stated by the DIFC.
The DIFC had previously updated its cryptocurrency regulations in 2022 and started subsidizing licenses for artificial intelligence and Web3 companies in 2023. The financial center also reported a net profit of $203 million in 2023, a 45% increase compared to the previous year. Additionally, there was a 34% rise in new registrations, including a greater presence of hedge funds and an influx of businesses from Europe and the United States.
While the new Digital Assets Law is being hailed as a first-of-its-kind legislation, it is not the first jurisdiction to address the treatment of cryptocurrencies as property. In the past year, courts in China, Singapore, and Hong Kong have issued rulings on digital assets as property.
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