This post is also available in: Español
Come 2019, Initial Coin Offerings (ICOs) will be recognized as a corporate funding option in the United Arab Emirates. UAE will become one of the very few countries to have a set of regulations for corporate funding via blockchain. Domestic companies will be able to use ICOs as a fundraising option, via the sale of crypto tokens, similar to the sale of shares in an IPO.
The head of securities regulator of the state, Obaid Saif al-Zaabi, said in a seminar:
“The board of the Emirates Securities & Commodities Authority (ESCA) has approved considering ICOs as securities. As per our plan we should have regulations on the ground in the first half of 2019.”
He stated that regulations are being drafted with advice from international experts in the field, and added that ESCA is working closely with the stock markets of Abu Dhabi and Dubai to develop trading platforms for ICOs. Details of this work are expected to be announced soon.
IPOs in the Gulf region and the UAE have gradually weakened in the recent past due to weak equity markets and a slump in oil prices.
The Ministry of Economy has asked for approval from the Prime Minister’s office. Zaabi pointed out that the new law will be of help to those IPOs where family owners sell all or most of their stake in the companies they own.
Some months back, the ESCA had sent out a warning to investors to be cautious about fundraising activities which are digital or token-based, including ICOs. It also pointed out that those who invested in ICOs did so at their own risk.
This decision by the UAE government is seen as an important development in the crypto world and follows decisions by many nations, including Malta, to regulate and legitimize ICOs. Malta, that has already garnered the reputation as a “Blockchain Island,” has embraced cryptocurrencies and blockchain tech with gusto, with Prime Minister Joseph Muscat already calling cryptocurrencies the “inevitable future of money” in his recent speech at the UN.