The terms “Blockchain” or “Bitcoin” were alien to the general public in the United Arab Emirates (UAE) when Satoshi Nakamoto began the Bitcoin phenomenon in 2008. However, today with one of the world’s first cryptocurrency deep “cold storage” companies operating in Dubai, it is clear that tides have shifted and the UAE is actively becoming part of this global trend. This article aims to summarise the current legal framework in the UAE relating to the global phenomenon that is blockchain technology and trading in cryptocurrencies. We will explore what the future may hold in relation to this digital space in the UAE and also briefly highlight regulatory updates in the Kingdom of Saudi Arabia (KSA).
Blockchain Technology and Cryptocurrencies
Blockchain technology is a decentralised public or private ledger that records transactions between two or more parties. It is this key feature of ‘decentralisation’ that makes this technology particularly attractive to investors globally. In particular, Nakamoto took advantage of the features of blockchain technology to create the most well-known cryptocurrency, Bitcoin. Cryptocurrency is an encrypted digital currency that operates using the blockchain technology. Unlike fiat currency, which is regulated by a single entity such as a central bank, cryptocurrencies are validated through a decentralised system whereby any party participating in the process can verify the transactions that take place.
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