Crypto and blockchain lawyer Irina Heaver has expressed concerns that the latest regulations in the United Arab Emirates (UAE) could result in a ban on crypto payments within the country.
On June 5, the board of directors of the Central Bank of the United Arab Emirates (CBUAE) discussed initiatives under the nation’s financial infrastructure (FIT) program, which aims to enhance digital transformation.
New Payment Token Services Regulations
During the meeting, the board approved the issuance of regulations for payment token services to oversee and license stablecoins. These new guidelines specify that payment tokens in the UAE must be backed by UAE dirhams and cannot be tied to other currencies.
Irina Heaver pointed out that these regulations effectively prohibit the use of cryptocurrencies for payments within the UAE. According to the new rules, the CBUAE is banning 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.
Potential Impact on Commerce and Investment
Heaver believes this development may contradict the UAE’s 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 freedom of contract under commercial law. This freedom allows parties to agree on their transaction terms, including payment methods and currencies.”
Heaver also raised concerns about how this new regulation aligns with the country’s economic principles and its potential impact on foreign investment.
Concerns for the Crypto Industry
The lawyer also noted that Tether (USDT) has been a “backbone of transactions” in Web3 and crypto. With the UAE aiming to advance in this sector, Heaver worries that the new rules could hinder progress by prohibiting the use of 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,” Heaver added.
Summary Review: The new regulations in the UAE could pose significant challenges for the use of cryptocurrencies in payments, potentially affecting the country’s appeal to foreign investors and its position in the digital economy.
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