The government of the United Arab Emirates is planning to form a clear regulatory framework on the usability of Bitcoin and digital currency exchanges in the near future.
On January 1, 2017, the Central Bank of UAE published a document “Regulatory Framework for Stored Values and Electronic Payment System,” that contained its vision of leading market adoption of digital payments and fintech technologies within the UAE.
A part of the document explicitly prohibited the use of virtual currencies, outlawing virtual currency transactions and trading. The document caused controversial discussions within the industry and raised a question whether the bill considers bitcoin and other digital currencies currently in existence.
Mubarak Rashed Khamis Al Mansouri, the governor of the Central Bank of the UAE, confirmed that the document doesn’t consider digital currencies like Bitcoin. Al Mansouri added that the central bank is considering legalising Bitcoin and “developing necessary regulatory frameworks for businesses and exchanges to comply with”.
The Central Bank of UAE may follow the example of the Bank of Canada, which recently announced that digital currencies like Bitcoin need government intervention for it to grow further.
In the report “Canadian Bank Notes and Dominion Notes: Lessons for Digital Currencies”, the researchers stated:
“We conclude that well designed and managed private digital currencies could circulate widely but only with appropriate government regulation to ensure their safety, soundness, and uniformity”.