UAE To Allow ICO’s As Funding Options For Local Firms In Effort To Drive Capital Markets

The securities regulator in the United Arab Emirates has approved the use of Initial Coin Offerings (ICOs) as a way of raising funds for local firms.


The securities regulator in the United Arab Emirates has approved the use of Initial Coin Offerings (ICOs) as a way of raising funds.

UAE embraces ICOs

According to a report published by Reuters, the UAE will soon introduce new regulations that will guide domestic companies looking to undertake a token sale to fundraise for projects.

The securities agency seeks to have the new rules in operation by the first half of 2019, making token sales legal within the country, according to the report.

Obaid Saif al-Zaabi, head of the country’s securities body, the Emirates Securities & Commodities Authority (ESCA), revealed the plans during a seminar held on October 8:

“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 market watchdog hopes that initial coin offerings will give local firms a different option for fundraising – one that would complement traditional methods of fundraising like IPOs.

The securities chief said that ESCA was already working on draft regulations targeted for ICOs.

The agency has enlisted the help of international advisers and has incorporated both the country’s stock markets at Abu Dhabi and Dubai in the development of platforms for trading of the digital tokens.

Permitting companies to crowdfund using digital token sales legally is a positive development for crypto in the Gulf state, one that could ultimately prove to be a shift in the right direction.

UAE exploring options for diversifying fundraising

The IPO market in the country has suffered massively due to a lean equity market, which has also taken big hits due to falling oil prices.

Years of decline in the sector has seen the IPO market in the entire Gulf region suffer – the token sale offers an attractive alternative that ESCA hopes will significantly help local firms.

Al-Zaabi indicated that apart from the impending regulation of the ICO market, the agency is also targeting enacting new laws that it hopes will help boost the IPO market.

The new laws will allow family owners to legally sell up to 100% stakes in the firms they control. The ESCA boss said that the agency is currently only waiting for approval from the prime minister’s office for the new measure to take effect.

If ESCA’s plans succeed, then it would position the U.A.E. as one of the few countries with a legal framework tailored to support the sale of securities tokens to raise funds.

These developments are akin to what the island nation of Malta has done in 2018 through bills that support blockchain, crypto and ICO projects.

The Maltese prime minister recently added more weight to his country’s determination of becoming a blockchain and cryptocurrency haven, telling the U.N General Assembly that crypto is the “future of money.”

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