As we bid farewell to 2024, it’s clear that this year has been a turning point in the global crypto regulatory landscape. Policymakers worldwide have taken significant steps towards comprehensive rules, recognizing the growing importance of cryptocurrency assets in mainstream finance.
A United Front: Regulators Step Up
From the United States president-elect pledging a strategic Bitcoin (BTC) reserve to the European Union’s rigorous Markets in Crypto-Assets (MiCA) directive, regulators are sending a clear message: they’re here to help regulate. The trend is unmistakable – governments worldwide are taking proactive measures to address concerns surrounding crypto assets.
A Global Perspective
President-elect Donald Trump’s plan to establish a strategic Bitcoin reserve has sparked both enthusiasm and debate. With rumors emerging that six other international governments, including Russia, Japan, and Thailand, are considering similar moves, it’s clear that top-tier governments now view Bitcoin as a strategic asset rather than a fringe experiment.
The EU’s MiCA regulation has had a significant impact on the crypto market, compelling exchanges to over-comply by delisting non-compliant stablecoins ahead of regulatory deadlines. This has pushed USDt (USDT) from what was once considered one of the world’s less relevant markets. Notably, Tether has continued to grow its market share despite this regulatory shake-up.
The UAE Regulatory Landscape
The United Arab Emirates (UAE) boasts a robust regulatory framework for virtual asset service providers (VASPs). With five regulators now available for companies seeking VASPs, businesses can align with the legal environment best suited to their offerings. Regulatory arbitrage is a feature of the UAE’s regulatory landscape, but it requires careful navigation.
Regulatory Developments in the UAE
A highlight of 2024 was the introduction of the Payment Token Services Regulation via Circular No. 2/2024 by the Central Bank of the UAE (CBUAE) in June 2024. This regulation governs the issuance of stablecoins and has a significant impact on the crypto market.
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. 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 Exemptions in the UAE
A tax development from the Federal Tax Authority has 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.
It’s essential to note that this development has been misinterpreted by some as the UAE exempting all cryptocurrency transactions from taxes. However, the exemption applies specifically to value-added tax.
New Entrants in the UAE
Regulatory clarity has a gravitational pull, drawing 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, 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.
Dubai’s DMCC Crypto Center
The Dubai Multi Commodities Centre (DMCC) Crypto Center welcomed many new entrants who relocated their HQ to the region’s most active crypto ecosystem.
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.
A Word of Caution
Buckle… no, lawyer up for 2025! Expect stronger Anti-Money Laundering (AML) rules, more defined stablecoin governance, and deeper cross-border regulatory cooperation.
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.
