UAE Law and Practice Contributed by: Stefan Mrozinski, Gabrielle Margerison (nee Lowe) and Arnold Krutilins, White & Case LLP
Where a regtech provider offers insourcing solu - tions, contractual safeguards will need to be put in place to account for any risks arising out of the reliance on these solutions by the regulated FSP. As dictated largely by industry custom, these agreements often require provisions regarding (among other things) the maintenance of appro - priate insurance policies, auditing rights in favour of the regulated FSP and reporting requirements. The requirements set out in the DIFC, the ADGM and the “onshore UAE” data protection laws will also need to be considered. 10. Blockchain 10.1 Use of Blockchain in the Financial Services Industry Please see 1.1 Evolution of the Fintech Mar- ket , 2.1 Predominant Business Models and 2.2 Regulatory Regime on the development of blockchain and virtual assets in the UAE. 10.2 Local Regulators’ Approach to Blockchain The UAE’s regulators have reacted quickly to the growth in the use of blockchain within the financial services markets, particularly in respect of assets traded and stored on blockchain tech - nologies: virtual assets. All of the relevant UAE regulatory authorities set out a definition for virtual assets (or similar term) and contemplate the impact and use of decentralised ledger tech - nologies (DLTs), such as blockchain, within the provision of regulated financial activities. The UAE’s regulatory landscape is continuously evolving in this space as it looks to attract block - chain technologies to the region with transparent regulation and practical solutions. For example, in November 2023, the ADGM released the Dis - tributed Ledger Technology Foundations Regu -
lations 2023, marking a significant milestone in the evolution of digital assets regulatory frame - works across the region and at an international level. 10.3 Classification of Blockchain Assets The UAE financial services regulatory frame - works each govern virtual assets to differing degrees, including those that are represented and stored on DLTs, ie, blockchain assets. The VA Decision defines virtual assets as “a digital representation of value that can be digi- tally traded or transferred and can be used for investment purposes” . This does not include the digital representation of fiat currency, securities or other assets. This aligns with the definition of virtual assets in the SCA Decision No 26/2023, relating to virtual asset platform operators. The DVAL defines a virtual asset as “a digital repre- sentation of the value that can be digitally traded or transferred, or can be used as an instrument for exchange, payment or investment purposes, including virtual tokens, and any digital represen- tation of any other value specified by the VARA in this regard” . Under the CBUAE’s RPSCS Regulation and SVF Regulation, virtual assets constitute “a digital representation of value that can be digitally trad- ed, or transferred, and can be used for payment or investment purposes” . Virtual asset tokens are also defined to mean a type of crypto-asset that can be digitally traded and functions as: • a unit of account; and/or • a store of value. Crypto-assets are cryptographically secured digital representations of value or contractual rights that use a form of DLT and can be trans - ferred, stored or traded electronically. The PTS
922 CHAMBERS.COM
Powered by FlippingBook