This is the first in a series of articles considering legal issues relating to bitcoin, cryptocurrencies and blockchain in the UAE.In this article we focus on the legal status of bitcoin and address the question of whether bitcoin is banned in the UAE.In part two we will consider the case for regulating bitcoin and cryptocurrencies and in part three we will consider legal issues relating to the adoption of blockchain technology by public and private entities in the UAE.Recent developments in the payments regulatory environment in the UAE have turned a spotlight on the legal status of bitcoin and other cryptocurrencies in UAE.On 1 January 2017, the UAE Central Bank published the “Regulatory Framework For Stored Values and Electronic Payment Systems” (see also United Arab Emirates – the New Digital Payments Regulatory Landscape).The focus of the Regulations was “to facilitate robust adoption of digital payments across the UAE in a secure manner,” but the Regulations contained the following statement which initially caused some concern among the cryptocurrency community in the UAE: “D.7.3.

Provisions for Virtual Currencies – All Virtual Currencies (and any transactions thereof) are prohibited” On its own terms, this statement was open to one possible interpretation as banning bitcoin and all other cryptocurrencies in the UAE.On 1 February 2017, the Governor of the UAE central bank, His Excellency Mubarak Rashed Khamis Al Mansouri, issued a statement to Gulf News saying that “these regulations do not cover ‘virtual currency’” and “these regulations do not apply to bitcoin or other cryptocurrencies, currency exchanges, or underlying technology such as Blockchain.” He further added that virtual currencies are under review by the Central Bank and new regulations will be issued as appropriate.bitcoin piyasasıThis, and the report from the Dubai Supreme Legislation Committee in November 2016 that it was considering “the present and future of the legislative and legal frameworks related to cryptocurrency known as Bitcoin” is a very welcome signal that the UAE is seeking to develop mature regulatory environment for the use of bitcoin and other cryptocurrencies and we eagerly await further guidance from the UAE authorities on this subject.bitcoin fy

In the interim, the question remains – what is the current legal status of bitcoin in the UAE?Bitcoin – a currency or a commodity?A threshold question in considering the legal status of bitcoin is whether it is classified in a jurisdiction as a commodity (like gold) or a currency (like dirhams or US dollars).bitcoin-qt ubuntu removeThere is no clear international consensus on this question at the moment – in the US, bitcoin has been treated as a commodity by the Commodity Futures Trading Commission and in the European Court of Justice, bitcoin has been treated as a currency for VAT purposes.ron paul bitcoin youtubeWhy does this matter?bitcoin to quarkIt matters for a number of reasons: What about blockchain?bitcoin stolen from wallet

Is it treated the same way as bitcoin and cryptocurrencies?It is very important to make a distinction between blockchain as an enterprise and social technology and bitcoin as simply one use case, albeit the most successful use case to date, of that technology.At a very basic level, a blockchain is a distributed ledger that records bitcoin transactions and is akin to an electronic database ledger used by financial services organizations to record fiat currency transactions.We will discuss the laws applicable to the use of blockchain by a public or private sector entity in a future article, but in terms of asking whether or not blockchain is permitted in the UAE, it would appear that there are no laws that prohibit the use of blockchain as an alternative to a more traditional database ledger.Where next for bitcoin and blockchain in the UAE?Bitcoin and blockchain appear to be on the radar of the UAE Government and the UAE Central Bank.The above report from the Dubai Supreme Legislation Committee notes that the UAE, “should be among the first in the region and the world to establish a legislative framework and a financial and organisational structure for this technology.” This would be a welcome development and in the next article we will set out the case for regulating bitcoin and cryptocurrencies and outline some possible approaches to creating a regulatory environment that protects confidence in the UAE’s financial systems, protects the consumer, supports the UAE’s smart government initiatives and drives innovation and growth in the fintech, payments and blockchain sectors.

Bitcoin payments firm YellowPay, by some accounts the first industry startup in the Middle East, has shut down for undisclosed reasons according to members of its founding team.Forming in 2014, YellowPay had sought to promote bitcoin as an e-commerce solution in the Middle East, enlisting a former managing director for PayPal as a senior advisor.Despite this traction, other sources suggested the startup faced issues with its business model, including a decision to continue to emphasize the benefits of digital currency for online payments, a business strategy that has fallen out of favor with the industry and investors.Still, the revelation comes amid a positive news cycle for the technology in the region, with the Dubai government officially partnering to host Keynote 2016, a blockchain-focused conference to be held 30th May.Further, the news comes as another Yellow founder and former advisor Ola Doudin raised an undisclosed seed round for a regional startup called BitOasis.Investors in the deal include MENA-focused VC firm Wamda Capital and regional payment processor PayFort.