Dubai-Based Economic Freezone DIFC Gets Rules to Govern Web3 Firms: All Details Here

Mar18,2024



Dubai, the emerging global hotspot for Web3 activities and businesses, has taken another important step to make things more attractive for interested people. A layer of regulations dedicated to the supervision of the Web3 sector has been placed at the Dubai International Financial Center (DIFC). This special economic freezone located in Dubai was established in 2004. This freezone operates under the Dubai Financial Services Authority – an independent regulator for the DIFC. With the influx of Web3 firms in Dubai, the regulator felt an urgent need to bring in some new laws.

Called the Digital Assets Law, the law adds some new Web3-focused rules while making changes to existing laws around contracts, obligations, security, damages, remedies and foundation.

“The DIFC is excited to announce the enactment of its digital assets legislation. We consider this law to be the first legislative act to comprehensively set out the legal characteristics of digital assets as a matter of property law and to provide for how digital assets can be controlled, transferred and disposed of by interested parties. Commenting on the development, Jacques Visser, Chief Legal Officer of the DIFC Authority, said.

In recent times, the DIFC has been gearing up to see a surge in Web3 firms entering the economic freezone. In August last year, the DIFC had decided to subsidize 90 per cent of the licensing costs for Web3 and AI firms.

Therefore, the newly enacted laws imposed by the DIFC outline the ways in which digital assets such as cryptocurrencies and NFTs will be monitored, transferred and dealt with by industry participants operating out of the DIFC freezone.

According to Visser, this is the first legislation in the UAE that comprehensively sets out the legal characteristics of digital assets under property law provisions.

DIFC officials officially stated, “The purpose of the Legislative Acts is to ensure that DIFC laws keep pace with the rapid developments in international trade and financial markets arising from technological developments, and to provide legal certainty for investors and users in digital assets.” give.” Announcement post that provides further details on the revised rules.

Dubai is often cited as the home of Web3 and many emerging technologies. In 2022, the crypto sector in Dubai came under a set of new regulatory frameworks. At that time, the UAE also established the Virtual Assets Regulatory Authority (VARA) – an independent body to oversee the governance of the crypto space. However, this law does not apply to the DIFC as the freezone has its own governing body.

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