The Dubai International Financial Centre (DIFC), a special economic zone with over 5,000 residents, has announced the passage of a new digital assets law and security law and amendments to existing law. The center has its own legal system based on English law.
The legislative developments seek to “keep pace with the rapid developments in international trade and financial markets […] and to provide legal certainty for investors in, and users of, Digital Assets,” according to a statement. DIFC Authority chief legal officer Jacques Visser said:
“We consider this legislation to be groundbreaking as the first legislative enactment to comprehensively set out the legal characteristics of digital assets as a matter of property law.”
The Digital Assets Law contains seven pages of text plus appendices. A law amending at least six previous laws to update them for digital assets has been passed but is not available online at the time of writing. The DIFC noted in its statement that the changes to the Law of Obligations made electronic records functionally equivalent to paper records.
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The much lengthier Security Law 2024 replaced a 2005 law and its 2019 amendment and incorporated the Financial Collateral Regulations into its text. The new law is modeled on the United Nations Commission on International Trade Law’s Model Law on Secured Transactions and aligns with international best practices, the DIFC said.
The DIFC updated its cryptocurrency regulations in 2022. It began subsidizing licenses for artificial intelligence and Web3 companies in 2023. The DIFC showed a net profit of $203 million in 2023, up 45% from the previous year. It also saw a 34% increase in new registrations that year. That included an increased presence of hedge funds among the newcomers, as well as an influx of businesses from Europe and the United States.
While the new Digital Assets Law is claimed to the first of its kind, it is not the first jurisdiction to address the issue of crypto as property. Last year, courts in China, Singapore and Hong Kong handed down rulings on digital assets as property.
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