As the use and numbers of crypto-currencies such as Bitcoin increase Muneer Khan and Samir Safar-Aly of Simmons & Simmons look at the approach the UAE financial services regulators are taking.
This article was first published by Emirates Law in April 2018, who have agreed to Simmons & Simmons making it available on elexica.
Crypto-currencies are a type of digital money. The first crypto-currency was Bitcoin but since its release in 2009, there are now over 900 different types. They can be bought or sold with other currencies, used to purchase goods from sellers who are willing to accept them as payment, make investments in various assets and are being held as investments themselves. A number of organisations around the world have taken to raising funds digitally (or crowd-funding) through "Initial Coin Offerings" (or ICOs - also known as Initial Token Offerings or Token Sales) which are typically accompanied by a whitepaper outlining their key features and the intended use of proceeds, where investors pay using crypto-currencies or conventional currencies in exchange for a new crypto-currency created and issued by a virtual or real company, which then uses the currency raised to hold assets and fund projects. It is the potential for crypto-currencies to be treated as equity investments securities which is one of the reasons for increased scrutiny from financial services regulators in this area.
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