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Dubai, UAE – A recent move by the UAE Central Bank (CBUAE) to regulate payment tokens has sparked concerns among industry experts that the country’s crypto ecosystem could be severely restricted.
Irina Heaver, a prominent crypto and blockchain lawyer, believes the new regulations could effectively prohibit crypto payments within the UAE. The guidelines, which focus on licensing stablecoins, require payment tokens to be backed by UAE dirhams and prohibit their connection to other currencies.
“These rules essentially ban crypto payments in the UAE,” Heaver told Cointelegraph. “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 policy shift contradicts the UAE’s traditionally pro-commerce and pro-investment stance. Historically, the country has thrived on foreign direct investment due to its liberal policies, including the absence of capital controls and the allowance for freedom of contract.
Heaver expressed concerns about the new regulations’ alignment with the country’s economic principles and their potential impact on foreign investment inflow. She noted that Tether, a widely used stablecoin, has been the “backbone of transactions” in the Web3 and crypto space.
“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 added.
Moreover, the absence of strong industry associations in the UAE, like Switzerland’s Crypto Valley Association, leaves policies unchallenged.
“The absence of a united voice in the UAE’s Web3 and crypto industry is a significant disadvantage,”
Heaver said. “Existing associations are fragmented and often serve as deal flow and business development platforms rather than advocating for the industry’s interests.”
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