The Dubai International Financial Centre (DIFC), a special economic zone housing over 5,000 residents, has introduced a series of legislative updates, including a new digital assets law and security law, along with amendments to existing laws. The DIFC operates under its own legal system based on English law.
The legislative changes aim to adapt to the rapid advancements in international trade and financial markets, providing legal certainty for investors and users of digital assets. Jacques Visser, Chief Legal Officer of the DIFC Authority, described the legislation as groundbreaking, particularly in defining the legal characteristics of digital assets within property law.
The Digital Assets Law, comprising seven pages of text along with appendices, establishes the legal framework for digital assets within property law. Additionally, amendments to existing laws have been made to accommodate digital assets, although the details are not yet available online.
The Security Law 2024, a substantial update to the 2005 law and its 2019 amendment, incorporates the Financial Collateral Regulations and is modeled on the United Nations Commission on International Trade Law’s Model Law on Secured Transactions. This alignment with international best practices enhances security and legal clarity within the DIFC.
The DIFC has been proactive in updating regulations, including cryptocurrency regulations in 2022 and subsidizing licenses for artificial intelligence and Web3 companies in 2023. Financially, the DIFC reported a net profit of $203 million in 2023, marking a 45% increase from the previous year. Moreover, new registrations surged by 34%, attracting hedge funds and businesses from Europe and the United States.
While the Digital Assets Law is touted as pioneering, other jurisdictions, including China, Singapore, and Hong Kong, have also addressed the classification of crypto as property through court rulings in the past year. This global attention underscores the increasing importance of regulating digital assets in the financial landscape.
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