As we bid farewell to 2024, it is clear that this year will be remembered as a pivotal moment in the global crypto regulatory landscape. The continued mainstream adoption of crypto assets has prompted policymakers worldwide to step up with comprehensive rules and regulations.
A New Era of Strategic Holdings
The news that President-elect Donald Trump’s plan to establish a strategic Bitcoin reserve in the United States has sparked both excitement and debate, with rumors now emerging that six other international governments are considering following suit. This bold move signifies that top-tier governments are recognizing Bitcoin as a strategic asset rather than a fringe experiment.
A Global Perspective
Across the Atlantic, the European Union’s Markets in Crypto-Assets (MiCA) directive has compelled crypto exchanges to over-comply by delisting non-compliant stablecoins ahead of regulatory deadlines. This move effectively pushed USDt (USDT) out of what some might consider one of the world’s less relevant markets. However, Tether did not seem to be shedding any tears in the corner, as it continued to grow its market share despite the EU regulatory shake-up.
The UAE: A Regulatory Haven
The United Arab Emirates has no shortage of regulatory bodies shaping its crypto sector. With five regulators now available for companies seeking virtual asset services, businesses can align with the legal environment best suited to their offerings. Regulatory arbitrage is indeed a feature within the UAE, but it needs to be navigated intelligently, bearing in mind the overarching federal regulations.
Key Developments in the UAE
A highlight of the year was when the Central Bank of the United Arab Emirates (CBUAE) introduced the Payment Token Services Regulation via Circular No. 2/2024 in June 2024, regulating the issuance of stablecoins. Moreover, after a 12-month grace period, businesses in the UAE will only be allowed to accept crypto payments in dirham-backed stablecoins issued by CBUAE-approved entities.
Similarly, the Abu Dhabi Global Market (ADGM) introduced a regulatory framework specifically for stablecoins, or ‘fiat-referenced tokens.’ Under these rules, issuers must fully back their tokens with reserves, maintain strong governance and ensure rigorous transparency.
Tax Developments
A tax development from the Federal Tax Authority provided that all cryptocurrency transactions are exempt from value-added tax (VAT) from November 15, 2024, retroactive to January 1, 2018. This tax relief is only relevant to those making a lot of trades on centralized UAE exchanges and being charged VAT on exchange fees.
Court Milestones and Media Misinterpretations
In a notable court decision, the Dubai Court upheld an employment contract stipulating that an employee’s bonus could be paid in the company’s native crypto tokens, in addition to other typical bonuses employees receive in the UAE. While some international media outlets reported that salaries can now be paid entirely in Bitcoin and crypto, such interpretations misread the court’s ruling.
Regulatory Clarity Attracts Global Players
Regulatory clarity has a gravitational pull, and in 2024, it drew significant market players to the UAE. Heavyweights like Binance, Crypto.com, OKX and Bybit received VASP licenses, expanding the range of services available, from exchange and lending to derivatives trading.
Ripple obtained in-principle approval from the Dubai Financial Services Authority within the DIFC. Meanwhile, in the ADGM, prominent companies such as Blockdaemon, Circle, Paxos and eToro made significant expansions or relocations, attracted by the region’s clarity and business-friendly climate. Tether’s USDt was listed as an accepted token in ADGM.
Gazing into the Future
As 2024 draws to a close, the shape of the future is becoming more apparent. In the US, all eyes are on the incoming Bitcoin strategic reserve. Europe’s MiCA framework may tighten further, pushing more companies out of the EU.
Within the UAE, the trend is toward more granular rules for token issuance, stablecoins and decentralized finance platforms. However, despite tighter regulations, the UAE is expected to attract even more global players.
Looking Ahead
Expect stronger Anti-Money Laundering (AML) rules, more defined stablecoin governance and deeper cross-border regulatory cooperation in 2025. Buckle up, or rather, lawyer up for the challenges ahead!
About the Author
Irina Heaver is a leading Bitcoin and crypto lawyer based in the UAE and Switzerland, recognized globally for her extensive experience and technical expertise. She holds a Juris Doctorate from Monash University and a Master of Laws degree in International Taxation and Energy Laws from Melbourne University, with advanced specializations in AI and blockchain technologies.
This article is for general information purposes only and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Disclaimer
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