UAE Legal Insights & Expert Commentary

Category: Finance

  • Landmark Reforms to the DIFC Courts: Dubai Law No. 2 of 2025 Takes Effect

      Dubai Law No. (2) of 2025 Concerning the Dubai International Financial Centre (DIFC) Courts will come into force on October 30, 2025. This pivotal new legislation repeals and consolidates the founding statutes of the DIFC Courts, marking a significant step toward streamlining judicial processes, expanding jurisdictional reach, and elevating alternative dispute resolution mechanisms within the DIFC. 

      Read more: Landmark Reforms to the DIFC Courts: Dubai Law No. 2 of 2025 Takes Effect


      The Law introduces wide-ranging changes that solidify the DIFC Courts’ position as a globally aligned, English common law jurisdiction, enhancing judicial efficiency and reinforcing legal clarity for businesses and individuals operating in the region. 
      Key Provisions and Changes Introduced by the Law
      The new law introduces several core reforms aimed at modernizing the court framework and enhancing the mechanisms for dispute resolution and enforcement. 

      1. Enhanced and Clarified Jurisdiction
        The Law provides greater clarity regarding the DIFC Courts’ jurisdiction, notably expanding the scope for non-DIFC related cases: 
      • Expanded Consent Jurisdiction: The Law explicitly permits the DIFC Courts to hear cases that do not have a direct connection to the DIFC, provided that both parties consent in writing to resolve their dispute within the DIFC Courts. This codifies and clarifies a crucial element of the DIFC Courts’ “opt-in” jurisdiction. 
      • Interim Remedies for Foreign Proceedings: The legislation confirms the DIFC Courts’ independent jurisdiction to grant interim and precautionary measures (such as freezing orders, disclosure orders, and injunctions) in support of proceedings, claims, or arbitrations brought outside of the DIFC. This provides a powerful tool for claimants seeking to protect assets within Dubai, regardless of where the main dispute is seated. 
      • Arbitration Supervision: The Law clarifies the DIFC Courts’ supervisory powers over arbitration, specifically confirming their exclusive jurisdiction over applications for the ratification or recognition of arbitration awards in accordance with DIFC arbitration law. 
      1. Statutory Mediation Centre and Enforceable Settlements ⚖️
        A significant development is the introduction of a formal structure for alternative dispute resolution: 
      • Establishment of a Mediation Centre: The Law provides for the creation of a statutory Mediation Centre, which will be available for resolving civil, commercial, and labour disputes. This move reinforces the DIFC’s commitment to encouraging amicable dispute resolution. 
      • Compulsory Enforcement of Settlements: Settlement agreements that are either approved by the Mediation Centre or ratified by the DIFC Courts are now granted enforceability, treating them akin to court judgments and significantly boosting the effectiveness of mediation. 
      1. Procedural and Administrative Updates
        The new framework introduces several procedural updates to enhance efficiency and transparency: 
      • Virtual and Remote Proceedings: The Law formalizes the use of virtual hearings and remote testimony, aligning the DIFC Courts with global judicial trends and improving access to justice, particularly for cross-border litigation. 
      • Contempt of Court: A clearer framework is established for what constitutes Contempt of Court, including the failure to comply with a judgment, decision, or order of the DIFC Courts, along with associated penalties. 
      • Court Assessors: Judges are empowered to appoint independent Court Assessors—experts in technical fields like engineering or valuation—to provide non-binding advice on complex matters, ensuring specialist insight without compromising procedural fairness. 
        Practical Implications
        The implementation of Dubai Law No. 2 of 2025 marks a transformative moment for the DIFC’s legal landscape. For businesses, the key implications include:
      • Greater Flexibility: The expanded consent jurisdiction provides local and international parties with a highly sophisticated, English common law option for dispute resolution, even if their contract or assets are outside the DIFC. 
      • Stronger Enforcement: The enhanced powers for interim relief and the compulsory enforcement of mediated settlements strengthen the security and enforceability of commercial agreements. 
      • Emphasis on Mediation: The focus on a statutory Mediation Centre encourages parties to consider a quicker, less costly alternative to traditional litigation, with the assurance that signed settlements are legally enforceable.

    • An Introduction to Cryptocurrency Law in Dubai and the UAE: A Multi-Regulatory Framework

        The United Arab Emirates (UAE) has firmly positioned itself as a global hub for digital finance and virtual assets (VAs), moving beyond fragmented guidelines to establish a comprehensive and innovative regulatory framework. This ecosystem, characterized by multiple governing bodies, is designed to foster innovation while ensuring robust investor protection and compliance with stringent Anti-Money Laundering (AML) standards.
        Understanding the UAE’s crypto law requires recognizing the distinct roles of the various federal and local authorities that regulate this space.

        1. The Core Regulator: Virtual Assets Regulatory Authority (VARA)
          Established by Dubai Law No. (4) of 2022, VARA is the cornerstone of virtual asset regulation in the Emirate of Dubai.
        • Jurisdiction: VARA has the mandate to regulate, supervise, and oversee all VA activities in the Emirate of Dubai, including Special Development Zones and Free Zones. It is important to note that VARA specifically excludes the Dubai International Financial Centre (DIFC) from its jurisdiction.
        • Mission: VARA’s core objective is to promote Dubai as an international hub for VAs, attract investment, and develop a legal framework that protects investors and curbs illegal practices.
        • VARA Rulebook: In 2023, VARA released its detailed Virtual Assets and Related Activities Regulations, establishing a comprehensive framework that includes compulsory rulebooks covering:
        • Company licensing and governance.
        • Compliance and Risk Management (including AML/KYC).
        • Technology and Information security.
        • Market Conduct.
        • Licensing: All entities operating as Virtual Asset Service Providers (VASPs)—such as exchanges, custodians, and broker-dealers—in onshore Dubai must obtain a VARA license.
        1. Federal Oversight and Mainland Regulation: The SCA and CBUAE
          Outside of the specialized local regimes, two federal bodies play critical roles:
          Securities and Commodities Authority (SCA)
          The SCA is the federal regulator for financial markets in the UAE (excluding Financial Free Zones).
        • Role: The SCA issues regulations for crypto-asset activities that constitute securities or financial products. Since 2020, the SCA has been tasked with supervising the crypto sector nationwide and licensing companies offering crypto-related services.
        • AML/KYC Compliance: All licensed VASPs, regardless of their primary regulator, must adhere strictly to the UAE’s federal Anti-Money Laundering (AML) and Know Your Customer (KYC) laws.
          Central Bank of the UAE (CBUAE)
          The CBUAE governs financial stability, payments, and banking services.
        • Role: The CBUAE primarily regulates fiat-to-crypto transactions, digital payments, and Stored Value Facilities (SVF). It mandates strict licensing and compliance for financial institutions dealing with VASPs.
        • Stablecoins: The CBUAE is actively developing a framework for the licensing and oversight of UAE Dirham-backed stablecoins, positioning itself as the primary regulator for this specific category of digital asset.
        1. Financial Free Zones: Specialized Independent Regimes
          The UAE’s two major Financial Free Zones operate with independent legal and regulatory jurisdictions, providing alternative regimes for Virtual Assets.
          Dubai International Financial Centre (DIFC)
        • Regulator: Dubai Financial Services Authority (DFSA).
        • Focus: The DFSA has a comprehensive Digital Assets Framework primarily focused on regulating Security Tokens. It applies a rigorous, risk-based approach to the licensing of firms dealing with these assets within its jurisdiction.
          Abu Dhabi Global Market (ADGM)
        • Regulator: Financial Services Regulatory Authority (FSRA).
        • Focus: The ADGM was the first in the region to introduce a detailed VA regulatory framework in 2018. It regulates a broad range of activities, including exchanges, custodians, and brokers, treating Virtual Assets as Commodities rather than specified investments.
          Conclusion
          The UAE’s approach to cryptocurrency law is neither prohibitive nor laissez-faire; it is proactive, specialized, and multi-layered. By separating the regulatory oversight across federal bodies (SCA, CBUAE) and specialized local/free zone authorities (VARA, DFSA, FSRA), the country ensures both strict financial crime prevention and regulatory certainty. This robust framework provides a clear pathway for legitimate crypto businesses to operate, establishing the UAE as a globally competitive and secure destination for digital asset innovation.

      • Pivotal Court Ruling in Dubai: Cryptocurrencies are Recoverable In-Kind or in Cash at Market Value on the Date of Enforcement

          Pivotal Court Ruling in Dubai: Cryptocurrencies are Recoverable In-Kind or in Cash at Market Value on the Date of Enforcement
          In a judicial precedent considered the first of its kind in the United Arab Emirates, the Dubai Commercial Court issued a landmark ruling in May 2025 addressing the legal complexity of dealing with cryptocurrencies in civil and commercial disputes, particularly given their sharp volatility and ease of transfer and concealment.

          Background of the Dispute: A Digital Investment via “WhatsApp”
          The case revolved around an investment agreement concluded via the “WhatsApp” application, through which the defendant received 29 Bitcoin and 102 Ethereum from the claimant, in exchange for a promise of a fixed 2% monthly return, a guaranteed principal sum, and the option for redemption at any time. When the claimant demanded the return of his assets, the defendant defaulted, prompting the claimant to seek legal recourse.

          Dual Legal Strategy: Specific Performance or Cash Compensation at the Date of Enforcement
          Before the court, the claimant asserted his right to the return of the cryptocurrencies in-kind (Specific Performance), based on the distinct nature of these digital assets as more than just a store of value, but unique assets that must be restored in their current form. Alternatively, if specific performance was impossible, the claimant sought monetary compensation, provided that it was calculated according to the market value of the currencies on the date of judgment enforcement, rather than the date of contract or filing the lawsuit.

          The Verdict: Judicial Flexibility and Economic Realism
          The Court ruled as follows:

          • Termination of the investment agreement.
          • Ordering the defendant to return 29 Bitcoin and 102 Ethereum in-kind.
          • In the event of non-compliance, ordering the defendant to pay the equivalent market value in UAE Dirhams as of the date of judgment enforcement.

          Legal Implications of the Ruling:

          1. Official Recognition: Judicial recognition of cryptocurrencies as recoverable and justiciable assets, enhancing legal confidence in digital transactions.
          2. Protection from Volatility: Adoption of the date of enforcement as the benchmark for valuing monetary compensation, which protects the creditor from market fluctuations.
          3. Enforcement Possibilities: Opening the door for enforcement against virtual wallets, including the possibility of compelling platforms like Binance to comply with judgments.
          4. Addressing Concealment: The Court’s acknowledgment of the difficulty in tracing digital assets, granting the claimant flexibility to opt for cash compensation if specific performance proves difficult.

          This ruling constitutes a turning point in the UAE legal environment, affirming that cryptocurrency-based claims are justiciable and enforceable, provided they are structured and argued effectively before the judiciary.

        • VARA, SCA, and the Code: Defining the Future of Crypto Regulation in the UAE

            The United Arab Emirates, led by Dubai, is rapidly shedding its image as a regulatory gray zone for cryptocurrencies and is solidifying its position as a global hub for virtual assets (VAs). Rather than adopting a single, centralized approach, the UAE has implemented a comprehensive, multi-layered regulatory matrix designed to categorize, license, and govern every type of crypto token and associated service. 

            Read more: VARA, SCA, and the Code: Defining the Future of Crypto Regulation in the UAE

            This new regime, anchored by the Virtual Assets Regulatory Authority (VARA) in Dubai and the Securities and Commodities Authority (SCA) at the Federal level, is a calculated effort to marry aggressive innovation with robust investor protection and market integrity. 
            VARA: The Catalyst for Crypto-Native Innovation in Dubai
            VARA, established under Dubai Law No. 4 of 2022, is the world’s first independent regulator focused exclusively on virtual assets. Its rules primarily govern all VA activities conducted in onshore Dubai (excluding the Dubai International Financial Centre, DIFC). 
            Clear Token Classification and Licensing
            VARA’s success lies in creating a clear, tiered licensing system that covers the entire value chain of virtual asset services (VASP). Key activities requiring a VARA license include: 

            • Virtual Asset Issuance: This covers businesses creating and launching new tokens. 
            • Virtual Asset Exchange Services: Required for operating any crypto trading platform. 
            • Broker-Dealer Services: Facilitating transactions between users. 
            • Custody Services: Holding or managing clients’ virtual assets. 
              Strict Market Conduct and Investor Protection
              VARA has been notably proactive in setting standards for market behavior. Its regulations are particularly strict on: 
            • Marketing and Advertising: Firms must provide clear disclaimers, avoid sensational claims (like “guaranteed profits”), and ensure all communication is fair, clear, and not misleading to protect retail investors. 
            • Token Disclosures: Issuers must provide detailed Whitepaper Disclosures, outlining the token’s utility, underlying assets, and associated risks—a foundational step toward ensuring transparency. 
            • Anti-Money Laundering (AML): VARA enforces rigorous compliance with federal AML/CFT laws, including implementing the “Travel Rule” which mandates the collection and transmission of originator and beneficiary information for transactions above a certain threshold. 
              SCA: Integrating Digital Assets into Federal Capital Markets
              While VARA manages the “crypto-native” space, the federal regulator, the Securities and Commodities Authority (SCA), has focused on integrating tokens that represent traditional financial instruments into the UAE’s established capital markets framework.
              A New Regime for Security and Commodity Tokens
              The SCA’s Decision No. 15/RM/2025 is a landmark piece of legislation that creates a legal framework for Security Tokens (STs) and Commodity Token Contracts (CTs). This move champions the principle of technological neutrality: 
            • Definition: If a token legally represents a share, a bond, or a tradeable debt (a Security Token), or if it represents physical assets like gold or oil (a Commodity Token), it is regulated exactly like its traditional counterpart. 
            • Trading Mandate: Crucially, STs and CTs must be traded and settled on a licensed “Market” or an Alternative Trading System (ATS) authorized by the SCA. This effectively plugs DLT-based financial products directly into regulated venues like the Abu Dhabi Securities Exchange (ADX) or the Dubai Financial Market (DFM). 
              This approach provides legal certainty and opens the door for the tokenization of real-world assets (RWA) under a known regulatory framework, appealing directly to institutional finance.
              The Central Bank and Financial Free Zones: A Unified Ecosystem
              The regulatory landscape is further defined by other key authorities:
            • Central Bank of the UAE (CBUAE): The Central Bank’s Payment Token Services Regulation (PTSR) governs any service that connects crypto to the conventional financial system, such as fiat-to-crypto conversions and payment services, ensuring control over systemic financial risk. 
            • Abu Dhabi Global Market (ADGM): The Financial Services Regulatory Authority (FSRA) in ADGM continues to refine its own comprehensive regime, particularly for Fiat-Referenced Tokens (FRTs) or stablecoins, often pioneering clear rules before the onshore regulators. 
              The UAE’s Differentiating Strategy
              The UAE’s token regime is not just about control; it’s about strategic global competitiveness. By offering clear, detailed rules across multiple regulatory bodies (VARA for innovation, SCA for capital markets, CBUAE for payments), the UAE offers a regulatory pathway for virtually every type of crypto business. 
              The result is a highly attractive proposition for major global exchanges and fintech firms seeking stability, clarity, and access to the regional market, positioning the Emirates as the world’s most deliberate and comprehensive jurisdiction for the digital asset economy.

          • Regulating the Future: How the UAE Governs Banking Innovation Through FinTech


              The UAE has cemented its position as a global financial hub, not by resisting the tidal wave of financial technology (FinTech), but by actively embracing it. The nation’s regulatory bodies, led by the Central Bank of the UAE (CBUAE), recognize that FinTech is a powerful tool for enhancing financial inclusion, market efficiency, and customer experience. Instead of imposing static rules, the UAE regulates banking innovation by creating proactive, innovation-centric frameworks that guide disruption rather than restrict it. 
              Here is a breakdown of how the UAE actively governs the banking sector through regulatory innovation:

              Read more: Regulating the Future: How the UAE Governs Banking Innovation Through FinTech

              The Central Bank’s Approach: Guided Disruption
              The Central Bank of the UAE (CBUAE) has moved beyond traditional oversight to become an enabler of digital finance, focusing its strategy on infrastructure and open standards.

               
              A. Mandating Open Finance and Interoperability
              The most significant move has been the introduction of regulations that mandate openness. The Open Finance Regulation (Circular No. C 7/2023) is a game-changer. It requires licensed financial institutions to create secure interfaces (APIs) for sharing customer data (with explicit consent) with approved third-party providers (TPPs). 

              Impact on Consumers: This regulation drives competition, forcing banks to integrate with FinTechs to offer better, personalized services.

              Impact on Businesses: It allows FinTechs to build innovative products like real-time working capital solutions (e.g., invoice financing) using up-to-the-minute business data, leading to faster credit decisions and less friction.


              B. Modernizing Core Infrastructure
              Innovation in regulation also means modernizing the rails upon which money moves. The CBUAE’s Financial Infrastructure Transformation (FIT) program aims to create a highly efficient, future-proof financial ecosystem. Key projects include: 

              Instant Payments: Developing a domestic instant payment platform to allow real-time movement of funds between banks and payment providers. 

              Digital Currency: Exploring and piloting a Digital Dirham to enhance wholesale and cross-border payments efficiency using distributed ledger technology (DLT). 


              C. Governing New Payment Methods
              To ensure safety in the shift to a cashless society, the CBUAE actively regulates digital assets used for payment. The Payment Token Services Regulation ensures that digital wallets and stored value facilities operate within a clear, secure legal framework, protecting consumer funds and maintaining stability. 

                Impact: This approach encourages foreign FinTech firms to choose the UAE by significantly reducing the cost and risk of launching groundbreaking technologies, accelerating the time to market.


                D. Dedicated Virtual Asset Regulation
                The free zones have pioneered clear frameworks for digital assets that were previously unregulated. ADGM was an early mover in issuing comprehensive rules for Virtual Asset Service Providers (VASPs). Similarly, the establishment of the Virtual Assets Regulatory Authority (VARA) in Dubai (under Law No. 4 of 2022) provides a dedicated, specialized license for firms dealing with cryptocurrencies, NFTs, and other digital assets, signaling a commitment to integrating this asset class into the formal economy securely. 
                Conclusion: A Framework for Economic Diversification
                The UAE’s regulatory strategy is clear: FinTech is not just a technological change; it is an economic growth driver. By embedding open banking standards, modernizing national payment systems, and providing dedicated testing grounds for innovation, the regulators are successfully shifting the banking sector from reactive compliance to proactive innovation. This balanced approach ensures that consumers and businesses benefit from world-class financial convenience, while the system remains stable, secure, and compliant with international standards for anti-money laundering (AML) and consumer protection.