Crypto and blockchain lawyer Irina Heaver believes the newly-released regulations in the United Arab Emirates (UAE) could effectively prohibit crypto payments in the country.
On June 5, the Central Bank of the United Arab Emirates (CBUAE) board of directors discussed projects under the financial infrastructure (FIT) program, which aims to enhance digital transformation.
During the meeting, the board approved regulations for payment token services, focusing on licensing stablecoins.
The new guidelines stipulate that payment tokens in the UAE must be backed by UAE dirhams and cannot be tied to other currencies.
Heaver told Cointelegraph that these rules essentially ban crypto payments within the UAE.
According to the regulations, 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.”
The blockchain lawyer believes this move contradicts the UAE’s traditionally pro-commerce and pro-investment stance.
She explained, “Historically, the UAE has thrived on foreign direct investment due to its liberal policies, including the absence of capital controls and the allowance for freedom of contract under the commercial law.
“This freedom enables the parties to agree on their transaction terms, including payment methods and currencies.”
READ MORE: South Korean Think Tank Warns Against Approving Spot Crypto ETFs, Citing Financial Stability Risks
Heaver expressed concerns about the new regulations’ alignment with the country’s economic principles and their potential impact on foreign investment inflow.
Heaver also noted that Tether has been the “backbone of transactions” in Web3 and crypto.
She argues that the UAE’s new rules might hinder progress in the sector by prohibiting stablecoins in transactions.
“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,” she added.
Moreover, Heaver highlighted the absence of strong industry associations in the UAE, like Switzerland’s Crypto Valley Association, which lobbied against unfavorable regulations by FINMA related to staking.
She said, “The absence of a united voice in the UAE’s Web3 and crypto industry is a significant disadvantage.
“Existing associations are fragmented and often serve as deal flow and business development platforms rather than advocating for the industry’s interests.”
Heaver emphasized that the lack of representation leaves policies unchallenged, which she believes could harm the growth of Web3 and crypto in the UAE.
To submit a crypto press release (PR), send an email to sales@cryptointelligence.co.uk.
