Dubai's DIFC Issues Law For Digital Assets

Dubai's DIFC Issues Law For Digital Assets

The Dubai International Financial Centre (DIFC) has introduced a set of new laws aimed at establishing a well-defined legal framework for digital assets within the center, including a new digital assets law, a new security law, and amendments to some existing laws.

New laws

Despite regulatory efforts to integrate specific digital asset applications into existing financial frameworks, the immense potential of this trillion-dollar asset class remains largely untapped, DIFC said in a statement released Wednesday.

The financial hub said it was introducing the new laws, effective March 8, because there's still no single, all-encompassing legal framework that clearly defines the legal properties of digital assets and how users and investors can interact with them, despite recent court decisions and legal developments in common law jurisdictions that have shed some light on these assets.

DIFC has also amended relevant existing laws, including the contracts law, obligations law, security law, damages and compensation law, trusts law, and institutions law. These amendments aim to specifically address new legal issues arising from this asset class.

The proposed digital assets law entails the legal characteristics of a digital asset, its proprietary nature, and how it may be regulated, transferred, and dealt with by interested parties, said Jacques Visser, chief legal officer at DIFC.

The proposed security law is based on the UN Commission on International Trade Law model on secured transactions, and it has been adjusted to include specific factors relating to the DIFC, Visser added.

DIFC performance

New company registrations with DIFC surged 34% to 1,451 in 2023, resulting in a 26% annual boost in total active companies registered with DIFC to 5,523. The fintech and innovation sector saw the highest level of annual growth at 31%, as DIFC noted 902 new company registrations from it.

DIFC reported a 27% increase in its operating profit to $233.9 million (AED 859 million) in 2023, as its combined revenues swelled at record-high rates to reach approximately $354 million (AED 1.3 billion). Revenues grew 23%, likely driven by the rise in the number of active companies registered under DIFC.