UAE Central Bank is carefully considering legalizing Bitcoin and plans to introduce a suitable regulatory framework

Following the steps taken by the governments of the Philippines and China to regulate digital currencies, the government of the United Arab Emirates (UAE) and its central bank have also taken action, with plans to provide a clear regulatory framework for Bitcoin and digital currency exchange operations in the near future.

On January 1, 2017, the Central Bank of the United Arab Emirates released a document titled “Regulatory Framework for Store of Value and Electronic Payment Systems” which mentions market-leading digital payment methods and financial technology (fintech) technologies.

Is Bitcoin Legal in the UAE?

It is reported that the D.7.3 section of the regulatory document explicitly prohibits the use of virtual currencies and does not recognize digital currency transactions. The document has caused various controversies in the UAE Bitcoin and Fintech industries, and many leading companies have asked the UAE Central Bank whether it will consider recognizing the existence of Bitcoin and other digital currencies.

In response, Mubarak Rashed Khamis Al Mansouri, Governor of the Central Bank of the United Arab Emirates, announced that the regulatory document does not actually include digital currencies (such as Bitcoin), digital currency companies, and blockchain technology.

Al Mansouri further pointed out that the UAE Central Bank is carefully considering legalizing Bitcoin and introducing the necessary regulatory framework for related businesses and transactions.

At the end of 2016, the Dubai government also emphasized that its government officials and political leaders would gather to discuss the potential of Bitcoin and blockchain technology in the financial field, especially in the UAE’s financial industry and ecosystem.

The government said in a statement:

“The Supreme Legislative Council (SLC) of the Emirate of Dubai has announced that it will discuss the current and future legislation and legal framework related to cryptocurrencies (Bitcoin) at a seminar. The SLC will work with the Dubai Electronic Security Center (DESC) to discuss the current status and future of the legislation and legal framework related to cryptocurrencies (Bitcoin). The seminar will be held on November 20, 2016 and will be attended by senior officials from local and federal government agencies.”

Similar to the Central Bank of the Philippines

Not long ago, the Central Bank of the Philippines recognized the legal status of Bitcoin as a remittance network and payment method in a document released.

Government officials and regulators in the UAE also see the huge potential of Bitcoin businesses, exchanges and markets. The governor of the UAE Central Bank and other important figures in the UAE financial industry have announced on multiple occasions that the government is about to release a national Bitcoin regulatory framework to ensure that the digital currency market can flourish under the government's careful supervision.

This approach is also similar to the Chinese government's strategy of allocating a lot of resources to regulating Bitcoin, using efficient and practical regulations to ensure that Bitcoin users still trade in compliant trading markets rather than choosing black markets or underground markets.

As of now, Bitcoin is considered a commodity in many countries, including Australia. In the near future, the use of Bitcoin will become legal in the UAE, and its government will soon release corresponding regulations.