United Arab Emirates: Crypto Currency - Legal Implications And Future

Last Updated: 22 August 2018
Article by STA Law Firm
Most Read Contributor in United Arab Emirates, September 2019

Cryptocurrency– A Magical Bubble or The Future of Currency?

The noise and media surrounding the notion of cryptocurrency have been increasing the curiosity rapidly. Before curiosity kills the cat, let's walk through the story of cryptocurrency.

Cryptocurrency is an innovative and a virtual currency that utilizes cryptography for security and this matter it is difficult to fake it. A characterizing highlight of a cryptocurrency is its organic nature; it is not issued by any government authority, rendering it hypothetically resistant to government obstruction or control. The mastermind behind cryptocurrency is the blockchain. A blockchain is digitized and decentralized of all cryptographic transactions. It is the process of converting readable data into a relatively uncrackable code, to track purchases and exchanges. Over the years, blockchain and cryptocurrencies have grown exponentially that uses as a financial service tool to improve transparency and efficiency.

Not many know that digital currencies rose as a side result of another innovation. Satoshi Nakamoto, the obscure innovator of Bitcoin, the first and still most critical cryptocurrency, never proposed to invent a currency in the first place. In his declaration of Bitcoin in late 2008, Satoshi said he built up "A Peer-to-Peer Electronic Cash System." The primary cryptographic currency was bitcoin, and since then there are currently more than 1,000 different types of cryptocurrency accessible on the web with over 200 Bitcoin ATM’s installed around the world.

The creation of Bitcoin is via a mining process where miners receive compensation for newly issues bitcoins. There is a limitation on the production of the number of bitcoins which is limited to 21 Million. Once the limit has surpassed, the miners will receive transaction fees instead of bitcoin. Individuals contend to "mine" bitcoins utilizing a computer to settle complicated math confounds. There is no curtailment on who can become a miner, all you need is a computer and accessible internet. Bitcoin transactions are not confidential as it is published to the public network to be verified by the system on miners. Therefore, it is possible to trace bitcoin between bitcoin wallets. The storage of Bitcoins is in a ‘digital wallet’ that exists either in the cloud or on the user’s computer that acts as a virtual bank account that allows users to exchange, trade or make transactions. FDIC does not insure bitcoin wallets like bank accounts. The operations are public, the owners of the portfolios can be anonymous. It is the most attractive feature of bitcoin as miners effectually vote on the legitimacy of each transaction as part of the mining process.

In this modern era of economics, where societies no longer have to rely on banks and other centralized institutions to keep track of their payments and guarantee the financial system. Blockchain technology frees people from this centralized trust. Cryptocurrency makes it less demanding to exchange finances between two parties in a transaction; these exchanges are encouraged using public and private keys for security purposes. These operations are done with minimal fees, enabling clients to maintain a strategic distance from the high expenses charged by most banks and financial organizations for wire transfers.  Cryptocurrency is digital and doesn't have a local repository since its digital it can be wiped out by a computer crash if a backup of the possessions does not exist. Since costs depend on free market activity, the trade rates of cryptocurrency can vary broadly.

The support of cryptocurrency is only by the trust of users rather than the authority of the state. Money is based on confidence and trust regardless of a nation's currency; whether it is dollars or dirhams, people accept it because it is recognizable as trade.

Paper vs. Electronic vs. Crypto?

Individuals have a variety of options when making a transaction from cash, debit, credit, crypto, etc. The massive multinational tech company, Microsoft recently added Bitcoin as a payment option on its online portal to purchase games, movies, and apps in the Windows and Xbox stores. Regardless of whether it is Pound, Dollar or Euros; All necessary cash monetary forms have lost enormously over the last year against the central five cryptocurrencies. Meanwhile, more than the US $ 90 billion has been put worldwide in crypto, and the pattern keeps on rising. The most striking contrast between cryptocurrency and paper money is that crypto is accessible virtually, while paper money exists in tangible form. Paper money accounts in the banking system via account numbers; digital currencies use addresses and cryptography that encrypt private data and mathematically verifies identities. European Central Bank defines virtual currency as an unregulated, digital fund which is issued and controlled by developer and utilized and acknowledged among the individuals from a particular virtual group. Through the use of cryptography, digital currencies are usually safer and more challenging to manipulate compared to the paper money. The transparency on the blockchain minimizes the risk of corruption. Therefore, some states are now considering the use of blockchain in the public sector.

Credit card transactions are the dominant payment method used across the web. If you have ever bought anything with your credit card from an online seller, you know the drill. Online seller takes the credit card details, and then sends it to a financial system with processors, banks, credit card companies, and other mediators. If you use PayPal or Venmo to carry out your online transactions, a third party takes your bank account details and approves the purchase and notifies the seller. Approaching the third-party system, you can keep the privacy and make a payment through a secure network, but you lose the simplicity of directly dealing with the online seller.  However, cash minimizes the possibility of buyer defaulting his debt. Money has some advantages as it has better anonymity whereas purchasing with credit card requires you to disclose your account details and it is easily traceable. Consequently, cash is not identifiable.

On the other hand, bitcoin doesn’t protect the status of anonymity as much as cash. Bitcoin doesn’t require you to reveal your real identity, but there is a connection with a public ledger of transactions and where the invasion can happen in the worst case scenario. It doesn’t require a central server but relies on peer to peer network. The disadvantage is that if the Internet fails or the user does not have access to the internet, one cannot execute the transactions. Another drawback is that if the crypto owner loses his key or accidentally wipes his wallet than that’s a threat to security. Cryptography is more suitable for tech-savvy users, the acceptance in the traditional trade is still low.

Crypto Theft

The murkiness around the subject of cryptocurrency often makes it seem dodgy or a scheme to sucker fools out of their money. Crypto users can be inclined to theft, fraud, and cons, which some contend is made less demanding on account of Bitcoin's structure and absence of control. The very idea of Bitcoin makes prevention of theft difficult, one of the most significant components being there is no real way to recover Bitcoin that has been stolen or conned, and no real way to return the transaction. Cryptocurrencies are not insusceptible to hacking. In Bitcoin’s history, we have acknowledged so far at least 40 thefts that exceed US Dollars one (1) million.  The recent breaking news in the crypto world is featuring One of Asia's most significant advanced money trades – Coin check that is known as the ‘world’s biggest ever cryptocurrency hack.’  Hackers have stolen £380m worth of cryptographic money from one of Japan's biggest advanced trades. Coin check, situated in Tokyo, said that there was a wrongful transfer of around 523 million of the trade's NEM coins to another record. The trade has suspended stores and withdrawals for all digital forms of money except for Bitcoin. In 2014, known to be the single greatest hack ever. At the time of the hack, Mt. Gox (Magic the Gathering Online Exchange) was the biggest Bitcoin trade in the world and took care of 70% of the world's Bitcoin trades. The trade was under a cyber-attack, and the programmer exchanged a large number of Bitcoin from the business to his record prompting the theft of $473 million in Bitcoin.

Cryptocurrency for Illicit Activities

Bitcoin is anonymous and flexible, which means its popular among criminals. The record of Bitcoin exchange is in an open log, names of purchasers and sellers that are out in public – just their wallet IDs. There is no bank or central authority, like a government or a state to control this information. It keeps bitcoin users’ transaction private and additionally gives them a chance to purchase or offer anything without effortlessly being traceable. That is the reason it’s a favorite choice for individuals to purchase drugs or other unlawful exercises on the web. It enables law requirement to track exchanges and have the capacity to make it less demanding to follow Bitcoin back to its proprietor, as was done in 2013 to capture one of the most prominent medication advertises that utilized Bitcoin. Bitcoin also became a conventional method for making payments when a computer system is taken over by ransomware. It has helped ransomware assaults. However, the degree of reprimanding Bitcoin is far from being naturally correct. Web security is considerably fragile, while programmers have been getting substantially more modern, so it would bode well that assaults would rise.

Despite the fact that Bitcoin can make it simpler for criminals and scammers to play out their devious deeds, regardless it is impeccably respectable and great speculation to invest. Any money has unlawful users; Bitcoin is the same in such a manner. By far most of the clients do utilize it legitimately, similarly as most utilize US dollars or any other currency lawfully. That doesn't mean one shouldn't be observant when using Bitcoin, likewise as you ought to be cautious on the web or to make any other transaction.

Cryptos Future

Cryptocurrency gives billions of people access to financial services that otherwise have no bank account. In developing countries, in particular, almost 60% of adults are excluded from the banking system because they do not meet the minimum requirements to open a bank account.  In countries where the currency is not stable like Zimbabwe or Venezuela etc. it serves as means of exchange and conservation. 

On the other hand, Crypto-related issues are also on the upsurge in companies and banks. At IBM, an estimate that by the end of 2017, around 15% of banks will use blockchain techniques, as these financial transactions are more efficient and less expensive.

However, no one knows what the future holds for Bitcoin. It is unregulated. A few nations like Japan, China, and Australia have started measuring controls. Governments are worried about tax collection and their absence of control over the money. Be that as it may, you cannot pay the rent utilizing Bitcoin or purchase insurance. There is yet to see what the future holds for cryptocurrencies.  

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions