SCA Ready to Introduce UAE ICO Regulations


The regulatory body of the United Arab Emirates’ financial markets, SCA, has reportedly entered the final stages of its plan to introduce UAE ICO regulations. What will these regulations bring to ICO operators in the UAE?

11 September, AtoZ MarketsThe financial regulator of the UAE is reportedly in its final stages before the adoption of the Initial Coin Offerings (ICOs) regulations. The UAE’s Securities and Commodities Authority (SCA) has proposed a regulatory framework that is aiming to recognize ICO tokens as securities. 

SCA Ready to Introduce UAE ICO Regulations

However, the financial regulator has warned about the risks involved. As the regulator has approved a plan that would outline its proposed framework for crypto asset activities regulations, the rules will be applicable for ICOs, exchanges and other intermediaries.

As per the official statement from the SCA, the new regulations will come into effect shortly. They will also address the full range of issuance cycle associated with crypto fundraisings. These include:

 “The type of issue (private/public), the entities that can make the issuing and the legislative requirements thereof, such as, inter alia, registration and fees, the Blockchain operators, the targeted entities by issue type, the minimum content of the prospectus (Whitepaper), liability thereof, and whether registration is or is not required by issue type.”

What now for ICOs in UAE?

For the operators of ICO, the regulatory framework will bring a proper regulation that covers key risk areas. The risks comprise anti-money-laundering and counter-terrorist financing, consumer protection, technology governance, and safe custody.

As per the guidelines, Blockchain startups that intend to carry out an ICO must contact the SCA in order to see whether it will fall under the regulation of the watchdog. Moreover, market intermediaries and secondary market operators that deal with ICOs should be approved by the regulatory body of the UAE. It is expected that ICO operators will need to publish a prospectus, similarly to what a firm would do for an IPO on the stock market. In case an initial coin offering has the characteristics of a security, such as giving a person ownership of shares in a company, then it will fall under the SCA’s regulation. 

The watchdog further states:

 “The presentation also discussed the licensing requirements for the platform of issuance, trading, clearing, listing, custody, settlement and payment to be defined as a central trading, custody, clearing, and depository platform, as well as the legal form to be taken by such platform. Furthermore, the presentation addressed the regulation of listing and trading of such securities, smart contracts used in the securities, the opening and registration of an e-Wallet on Blockchain, especially the KYC and money-laundering requirements.”

In fact, according to statistics, this year, start-ups have raised almost $14 billion from ICOs. This is compared to less than $4 billion back in 2017.

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