UAE Law and Practice Contributed by: Stefan Mrozinski, Gabrielle Margerison (nee Lowe) and Arnold Krutilins, White & Case LLP
10.4 Regulation of “Issuers” of Blockchain Assets
Regulation defines a payment token as “a virtual asset that maintains a stable value by referencing the value of the fiat currency it is denominated in or another payment token denominated in the same fiat currency” . Under its guidelines relating to the Regulation of Virtual Assets and Virtual Assets Service Provid - ers, the SCA defines virtual assets as “a digital representation of value that can be traded or digitally transferred and can be used for invest- ment purposes, and does not include digital representations of paper currencies, securities or other money” . In “offshore UAE” , the DFSA regulatory regime captures different types of tokens (defined as a cryptographically secured digital representa - tion of value, rights or obligations, which may be issued, transferred and stored electronical - ly, using DLT or other similar technologies) to varying degrees, which include crypto tokens, non-fungible tokens (NFTs), investment tokens, security tokens and utility tokens. The FSRA also regulates virtual assets, which it defines as a dig - ital representation of value that can be digitally traded and functions as: • a medium of exchange; • a unit of account; and/or • a store of value but does not have legal ten - der status in any jurisdiction. Under the FSMR, a virtual asset is: • neither issued nor guaranteed by any jurisdic - tion, and fulfils the above functions only by agreement within the community of users of the virtual asset; and • distinguished from fiat currency and e-money.
Requirements and conditions around the issu - ance of virtual assets are set out in VARA’s Vir - tual Asset Issuance Rulebook (the “Issuance Rulebook” ). The Issuance Rulebook includes requirements that all persons in Dubai wishing to issue virtual assets must follow the registration requirements for issuing permitted virtual assets and obtain approval from the VARA for issuing a virtual asset that is not a permitted virtual asset. Permitted virtual assets are: • free and non-transferable virtual assets; • non-redeemable and non-transferable virtual assets; and • redeemable closed-loop and non-transferable virtual assets. The issuer of a permitted virtual asset must: • register a white paper of the virtual asset with the VARA at least seven working days before its publication, accompanied by a declara - tion signed by the issuer in the form set out in Schedule 2 of the Issuance Rulebook which must be sent to the VARA; and • comply with the requirements set out in the Issuance Rulebook. In its guidelines relating to the Regulation of Vir - tual Assets and Virtual Assets Service Provid - ers, the SCA regulates the provision of financial services related to the issuer’s offer and/or sale of virtual assets or participation in the provision of these services. The FSRA also sets out guidance in respect of initial coin offerings in its “Guidance – Regulation of Initial Coin/Token Offerings and Crypto Assets under the Financial Services and Markets Regu-
923 CHAMBERS.COM
Powered by FlippingBook