UAE To Allow ICOs To Boost Capital Markets

The United Arab Emirates (UAE) is planning to create rules that would allow domestic companies to raise money through initial coin offerings (ICO).

Speaking at a seminar, Obaid Saif Al-Zaabi, head of the Emirates Securities & Commodities Authority (ESCA), revealed that the board of ESCA has approved considering ICOs as securities and will be releasing regulations on the ground in the first half of 2019.

“ESCA is drafting regulations for ICOs with international advisers and is working with the Abu Dhabi and Dubai stock markets to develop trading platforms for the offers,” Al-Zaabi said. “Further details will be announced in the future.”

Last month, ESCA approved a plan setting out its proposed framework to regulate crypto-related activities, including ICOs and exchanges. At the time, the regulator said the framework would cover key risks including anti-money-laundering (AML) and counter-terrorist financing (CTF), consumer protection, technology governance and safe custody.

“The presentation also discussed the licensing requirements for the platform of issuance, trading, clearing, listing, custody, settlement and payment to be defined as a central trading, custody, clearing, and depository platform, as well as the legal form to be taken by such platform,” ESCA said. “Furthermore, the presentation addressed the regulation of listing and trading of such securities, smart contracts used in the securities, the opening and registration of an e-Wallet on Blockchain, especially the KYC and money-laundering requirements.”

If the new ICO regulations come into law, it would allow UAE companies to raise funds via token sales as an alternative to initial public offerings (IPO), which has gone off to a slow start this year, with capital raising amounting to only $263 million from 6 IPOs, compared to $872 million from 13 deals in H1 2017 and $639 million from 3 deals in H1 2016.

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