The Dubai International Financial Centre (DIFC) has passed new digital assets and security laws, aiming to keep pace with international trade and financial markets.
The Dubai International Financial Centre (DIFC), a specialized economic zone housing over 5,000 residents, has unveiled a new digital assets law and security law, along with amendments to existing legislation. The DIFC operates under its own legal system based on English law.
The legislative updates aim to keep up with the fast-paced developments in international trade and financial markets, providing legal certainty for investors and users of digital assets, as stated by the DIFC Authority chief legal officer, Jacques Visser:
“We view this legislation as groundbreaking, being the first legal enactment to comprehensively define the legal characteristics of digital assets under property law.”
The Digital Assets Law spans seven pages with appendices. Although not available online at the time of writing, a law amending at least six previous laws to modernize them for digital assets has been passed. The DIFC highlighted in its statement that the changes to the Law of Obligations have made electronic records functionally equivalent to paper records.
The Security Law 2024, significantly longer than its 2005 predecessor and its 2019 amendment, has absorbed the Financial Collateral Regulations. Modeled on the United Nations Commission on International Trade Law’s Model Law on Secured Transactions, the new law adheres to international best practices, according to the DIFC.
The DIFC revised its cryptocurrency regulations in 2022 and began offering subsidies for licenses to artificial intelligence and Web3 companies in 2023. Reporting a net profit of $203 million in 2023, a 45% increase from the previous year, the DIFC also experienced a 34% rise in new registrations, including more hedge funds and businesses from Europe and the United States.
While the new Digital Assets Law is hailed as the first of its kind, other jurisdictions have addressed the issue of cryptocurrencies as property. In the past year, courts in China, Singapore, and Hong Kong have issued rulings regarding digital assets as property.