Today, Initial Coin Offerings (ICOs) have provided the necessary entry point for many successful blockchain companies. Similarly, they have created a beneficial path for virtual currencies to gauge public interest for their tokens. While frequent ICO-related fraud cases tend to overrun ICOs, it wouldn’t deter some governments. To end the menace, governments around the world are using stringent measures to curtail ICO exit-scams. Indeed, one of such governments is the United Arab Emirates (UAE). With the new ICO regulations the UAE government has enacted, companies can take advantage of them to raise capital.
The New ICO Rules
The new rules will take effect in 2019, allowing companies to take advantage of ICOs within the purview of UAE regulations. Opposite to ICOs, business people can use Initial Public Offerings (IPOs) to raise funds in the UAE. Looking at the two fundraising methods, one could easily deduce that the difference lies in the fact that IPOs are fundraisers that involve stocks. When these rules have been successfully approved, this measure will make UAE one of the few countries that have ICO regulatory frameworks. Malta has implemented a similar law that regulates ICOs, blockchains, and cryptocurrencies. Indeed, the level of expertise that the small European country displayed has earned her a nickname, “Blockchain Island.”
UAE Security Watchdog Is Laying the Investment Foundation
Already, the UAE’s securities watchdog, Emirates Securities & Commodities Authority, has released the first set of rules. These rules will govern how to set up an ICO in the country. The regulator is also working round the clock to ensure that they set up trading platforms compliant with these rules in Abu Dhabi and Dubai. Essentially, the strategy is to build a platform within the existing stock market that will support tokenized fundraisers. In truth, the setbacks that compelled the UAE government to allow digital assets trading are low IPO activities and a drop in oil prices. Sadly, the drop in oil prices hasn’t only affected the Islamic country, but it has also affected its neighbors.
Amended IPO Laws Are Underway Too
While the new law is targeting ICOs in the UAE, the IPO is not left out of the calculus. Indeed, the country is currently working out the ICO regulations logistics without recourse to existing IPO rules. According to the head of Emirates Securities & Commodities Authority, Obaid Saif al-Zaabi, the agency would roll out its full plans by the end of the second quarter, 2019. Al-Zaabi noted that the amended IPO laws would encourage family members to sell up to 100% share of their firms. The head of the financial securities watchdog pointed out that the laws are subject to the prime minister’s approval.
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