Category Archives: Abu Dhabi

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Abu Dhabi Securities Exchange Releases Thought Paper on Crypto Assets

Abu Dhabi Securities Exchange (ADX), in collaboration with Central Securities Depositories and with support from International Securities Service Association (ISSA), recently released a thought paper containing infrastructural guidelines for distributed ledger technologies, and issuance of cryptocurrencies, reports the Emirates News Agency on 6 November 2018.

In an attempt to provide clarity on the technical and operational standards required for the issuance of cryptocurrencies, ADX designed the thought paper as a sample protocol to form a framework guiding financial institutions who want to transit back and forth between traditional financial assets and cryptocurrencies.

The securities exchange, having 69 traditional Emirati companies listed already, continues to drive towards innovation to achieve the fintech pinnacle. This was clarified in a statement made by its CEO Rashed Al Blooshi:

“At ADX, we embrace new and innovative technology and are always looking to capitalize on advancements in FinTech… ADX continues its efforts to manage the transition from conventional assets to more encrypted assets, which are witnessing major and rapid development in the region.”

Al Blooshi sees ADX as an important player in the regular financial markets. By leveraging its membership with the ISSA Central Securities Depositories Working Group, it plans on gaining more exposure to distributed ledger technology in order to further develop the blockchain infrastructural space. He further acknowledges that the current financial market is outdated and in need of an infrastructural overhaul and that this should be prioritized alongside incorporating standards of governance in order to keep the market whole and maintain investors’ confidence.

Apart from the fintech application of blockchain, as a nation, the UAE has shown great interest in the development of other blockchain-related products and promoting the industry within its economy.

In April, the UAE government launched the Emirates Blockchain Strategy 2021. This scheme is expected to help the emirate nation capitalize on the perks of blockchain enterprise by transforming 50% of government transactions into the blockchain platform by 2021. Objectively, this would help it save AED 11 billion in transactions and document processed routinely, 398 million printed documents annually, and 77 million work hours annually – in summary, save time, efforts and resources.

A little further down the year, the UAE began showing interest in initial coin offerings (ICO), when its national securities regulator hinted on plans to open up its capital market to ICOs. Rigorous regulatory exercises accompanied this intention since ICOs, according to the Board of Emirate Securities, are now considered as securities.

 

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UAE Plans ICOs for Corporate Fundraising as Oil Price Slumps

The United Arab Emirates (UAE) is going ahead with its plans to use initial coin offerings (ICOs) for fundraising local startups in the new year to help boost financing in capital markets.

If successful, the UAE could become one of just a few countries in the world to implement a regulatory framework around ICOs and cryptocurrencies. To create this environment, the UAE has stated that domestic companies will be legally able to fundraise using ICOs next year, alongside traditional IPOs. To facilitate this, legislation will deem ICOs as securities in a draft to be enacted early in 2019.

Last year Abu Dhabi issued guidelines on cryptocurrencies and ICOs, regulating the latter as “securities”. Cryptocurrencies are considered commodities by the government of Abu Dhabi but are not legal tender. The move to introduce ICOs was confirmed by UAE securities market watchdog chief Omar Saif al-Zaabi who commented:

“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.”

IPO performance has been significantly weakened over the past two years by a number of economic factors, including low oil prices and a weak equity market in the Gulf as a whole. In order to stem the tide, a new law is being brought into legislation which now will permit family-owned businesses to sell a majority of even 100% stakes in their companies with IPOs. Also, in a radical move for the region, it is suggested that there should be a mandated 20% of women on company boards, in the hope to attract more female investors.

The ESCA has sought help from overseas to implement their new plans and draft the new ICO regulations; its next task will be to develop crypto platforms to support the launches with support from both the Abu Dhabi and Dubai stock markets.

In other news from the Gulf, it was announced yesterday that Dubai residents will soon be able to pay for school fees, bills and some retail purchases using emCash, a state-developed blockchain crypto, which the government hopes will have wider applications in the future. A spokesperson for the state-backed subsidiary, emCredit, stated:

“To be the world’s first city to offer blockchain-based payment solutions to our residents is an exciting moment for Dubai… Deploying cutting-edge technology such as blockchain is a key priority and is delivering benefits to our citizens in the form of convenience and securities to customers and merchants across Dubai.”

The project was initiated by Dubai Department of Economic Development.

 

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Abu Dhabi Regulator Wants Internationally Standardized Crypto Regulation

Abu Dhabi’s head financial regulator has called for internationally standardized regulations for cryptocurrencies in order to prevent both criminal activities and their negative impacts on the image of virtual currencies.

Richard Teng, head of the Financial Services Regulatory Authority of the Abu Dhabi Global Market (ADGM) spoke at the country’s fintech event this week where he detailed the necessity for increased regulation of the space.

“This space needs to be properly regulated, otherwise there is the risk of financial crime… Every time a coin gets stolen or lost, it affects the confidence in this asset class,” Teng shared with the audience.

He continued, saying that he has full confidence in the country’s own ”comprehensive regime.” By sharing Abu Dhabi’s experience with global regulators including the US Securities and Exchange Commission, he hopes to bring a stronger trust in cryptocurrency to investors and governments alike.

International AML Laws Coming

Teng’s sentiment is popular among international regulatory leaders. On Wednesday, the Financial Action Task Force (FATF) announced that they are a step closer to establishing global anti-money laundering (AML) policies for cryptocurrencies, with a FATF plenary scheduled in October.

During this discussion period, the task force consisting of 35 member jurisdictions and 2 regional organizations hope to agree upon what existing standards need to be adjusted in relation to cryptocurrencies, and what action the states need to take to uphold this.

The agency’s president Marshall Billingslea echoed Teng’s opinions in saying that the standards need to be applied in an internationally standardized way. Billingslea described the current AML policies as ”very much a patchwork quilt or spotty process” which leaves major vulnerabilities in financial systems on an international and state scale.

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