Digital assets will be utilized and regulated in accordance with the Digital Assets Law No. 2 of 2024 across a broad spectrum of use cases.
A financial hub in the United Arab Emirates, Dubai International Financial Center (DIFC), has introduced the first digital assets legislation in the world to address the fallout from the new digital assets regime and the updated security regime.
According to the press release, the purpose of the legislative actions is to provide users and investors in digital assets with legal certainty while also making sure DIFC laws stay up with the fast changes in global trade and financial markets caused by technological advancements.
In 2024, the Digital Assets Law, No. 2, will govern and make use of digital assets in a variety of contexts. This is because blockchain technology has brought forth some very basic advantages.
As a result, DIFC now provides a complete legal framework that describes all of a digital asset’s legal features and how users and owners in this asset class can deal with digital assets and each other.
The DIFC is presently passing its own Digital Assets Law after a thorough examination of the various countries’ approaches to digital assets and a public consultation phase in 2023.
In addition, the DIFC Amendment Law No. 3 of 2024 has modified established DIFC laws, including the Contracts Law, Law of Obligations, Law of Security, Law of Damages and Remedies, Trust Law, and Foundations Law, to address particular concerns that may arise in connection with this asset class.
It is now possible to employ electronically transferable records according to revisions to the Law of Obligations. Digitally transferable records serve the same purpose as their paper counterparts, including warehouse receipts, promissory notes, bills of exchange, and bills of lading. Electronic document recognition allows for smart contract automation of specific transactions and faster, more secure transfer of paperwork, both of which improve efficiency in cross-border digital commerce.
Regarding the DIFC Law of Security, in light of the growing number of businesses and platforms that facilitate the extension of credit through digital asset collateral arrangements, as well as the growing push to digitize international trade, the DIFC is revoking the 2005 Law of Security and establishing a new one to greatly improve and update the DIFC’s securities regime.
According to the release, this will clarify the process of gaining control of digital assets and bring the regime in line with global best practices. This comes at the same time that DIFC is doing away with the Financial Collateral Regulations and incorporating its requirements into a whole new section of the Security Law.
“It is with great excitement that DIFC announces the passage of its Digital Assets Law,” said Jacques Visser, Chief Legal Officer of DIFC Authority. “Since no previous law has ever addressed the nature, ownership, transfer, and disposal of digital assets in such a detailed manner, we hail this bill as a turning point in the history of intellectual property law.”
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