In a bid to create an alternative fundraising avenue for companies through crowdfunding, the United Arab Emirates is set to introduce ICO regulations by the first half of 2019.
According to local reports, UAE’s Securities and Commodities Authority (SCA) has already approved Initial Coin Offerings as securities. The SCA, which monitors and supervises the market, is set to work with the Dubai Financial Market (DFM) and the Abu Dhabi Securities Exchange (ADX) to develop ICOs trading platforms next year.
SCA’s chief executive officer, Obaid Al Zaabi revealed that agreements had been filed with law firms for the agencies to create rulebooks and a “regulatory sandbox” for ICOs in the country. A “regulatory sandbox” refers to a framework built to facilitate the development of a financial technology industry. Al Zaabi further added that the legal procedures would be finalized in the first half of 2019, followed by the adoption of the technology and infrastructure development for exchanges.
Following the move, the SCA will help Dubai and Abu Dhabi stock markets to use cryptography with the latest blockchain technology for issuing ICOs. An implementation plan is also set to be in motion after finalizing the agreements with the DFM and ADX.
While addressing the current bear market in the cryptocurrency industry, SCA’s chief executive noted that the regulator isn’t concerned about it. According to Al Zaabi, the regulator’s concern isn’t on Bitcoin, Ethereum or the others, but it’s rather about crypto issuance and trading on the exchanges. Following Al Zaabi’s statement, ICOs are a novel way for crowdfunding and an opportunity for small and medium enterprises to get capital away from traditional methods. While crowdfunding is provided through the internet, the fundraising can be more secure by using the blockchain technology.
The technology will mostly benefit smaller businesses in issuing initial coin offerings on a reliable platform. The SCA will authorize a select class of secured asset in issuing ICOs, with security being their main priority.
Notably, UAE is continually opening up to the crypto space. As recently revealed, the country is partnering with Saudi Arabia to release a crypto-token for interbank transactions jointly. The regulator has also set aside enough money to introduce extra layers of efficiency and security in the fast-changing local financial markets.
Earlier in September, UAE’s authorities warned against crypto-related scams, while predicting that electronic tokens are set to replace fiat in the future.