UAE’s Securities & Commodities Authority to Regard ICO Tokens as Securities

The UAE might approve initial coin offerings organized by companies listed on local stock exchanges, the head of the Emirates Securities & Commodities Authority said.

The United Arab Emirates (UAE) plans to endorse initial coin offerings (ICOs) starting with next year to offer local firms a new way to raise capital, Reuters reports, citing the head of the UAE’s securities regulator. ICOs represent a relatively new method by which companies can raise crypto funds similarly to how they manage initial public offerings (IPOs). However, the new approach doesn’t induce much confidence given the high number of scams, but the UAE seems to not worry so much as it plans to regulate the market.

On Monday, Obaid Saif al-Zaabi, the head of the Emirates Securities & Commodities Authority (SCA), said during a seminar:

“The board of the Emirates Securities & Commodities Authority has approved considering ICOs as securities. As per our plan we should have regulations on the ground in the first half of 2019.”

The SCA has been working on ICO-related regulations with international advisers. The agency is now collaborating with Dubai and Abu Dhabi stock markets to build trading platforms for the upcoming ICO tokens, al-Zaabi stated, adding that the SCA would provide more details later.

The regulator initially hinted that it would approve ICOs last month, though it didn’t specify its stance more clearly. So far, the SCA hasn’t mentioned whether the upcoming ICO tokens will have to act as security tokens, which provide holders with company shares and sometimes dividends and voting rights.

The SCA’s move comes amid the slowing IPO market in the UAE and the entire Gulf Arab region, especially because of weakened equity space.

In order to support IPOs, the UAE might approve a new law next year to help IPOs in which family owners sell majority stakes in the firms they control. Zaabi stated:

“The Ministry of Economy has written to the prime minister’s office and we are awaiting approval.”

Another pending law wants to require that stock exchange listed companies have at least 20% women on the boards of directors.

On Monday, Dubai, the largest city in the UAE, launched its first investment week. Dubai Investment Week 2018 was inaugurated by Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, deputy ruler of Dubai. The event was held under the theme “Investing in Future Transformations” and touched upon innovative technologies, including blockchain, and private-public partnerships. The event comes as the country records record figures in the inflow of foreign capital. In Dubai, Foreign direct investment (FDI) increased to$4.84 billion in the first quarter of this year, up 26% in annual terms.

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