UAE Approves Plans to Regulate ICO Tokens as Securities

The UAE’s financial regulator is taking the final steps to regulate the way that Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Read this Term start-ups are raising money - initial coin offerings - and has warned of the many risks involved. The watchdog is proposing a fit-for-purpose regulatory framework that effectively recognizes digital tokens as securities.

Specifically, the UAE’s Securities and Commodities Authority (SCA) today approved a plan setting out its proposed framework to regulate crypto asset activities, including ICOs, exchanges and other intermediaries.

According to the SCA’s statement, the new regulations, which come into effect shortly, also address the full range of the issuance cycle associated with crypto fundraising, including: “..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.”

For ICO operators, the framework will entail proper Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term that cover key risks including anti-money-laundering and counter-terrorist financing, consumer protection, technology governance and safe custody.

Under the guidelines, startups wishing to execute an ICO must approach the SCA to see if it falls under the body's regulation. Also, market intermediaries and secondary market operators dealing with ICOs must be approved by the regulator.

Most likely, ICO operators will have to publish a prospectus, just like a firm would for an IPO on the stock market. And if an ICO has the characteristics of a security, such as giving a person ownership of shares in a company, then the SCA will regulate it.

It further explains: “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.”

This year, start-ups have raised nearly $14 billion from ICOs, compared to less than $4 billion in 2017.