The Dubai International Financial Centre (DIFC) has enacted the world’s first Digital Assets Law, alongside amendments to existing legislation, to address the consequences of the new digital assets regime and revised security regime.
The legislative changes aim to keep pace with technological developments and provide legal certainty for investors and users of digital assets.
The Digital Assets Law, DIFC Law No. 2 of 2024, defines the legal characteristics of digital assets and outlines how they can be controlled, transferred, and dealt with. Moreover, the regulator has repealed the 2005 Law of Security and the Financial Collateral Regulations., replacing them with a new Law of Security that will enhance DIFC’s securities regime in line with international best practices.
DIFC has also made updates to existing laws such as the Contracts Law and Law of Obligations to address specific issues arising in relation to digital assets. The changes to the Law of Obligations take into account the use of electronic transferable records to drive greater efficiencies within cross-border digital trade.
“DIFC is excited to announce the enactment of its Digital Assets Law,” said Jacques Visser, Chief Legal Officer at DIFC Authority. “We consider this legislation to be groundbreaking as the first legislative enactment to comprehensively set out the legal characteristics of digital assets as a matter of property law, and to provide for how digital assets may be controlled, transferred and dealt with by interested parties.
“At the same time, we are also enacting a new Law of Security, replacing the 2005 law. The revised regime is modelled on the UNCITRAL Model of Secured Transactions and significantly enhances DIFC’s securities regime to keep pace with international developments in this field and to ensure DIFC remains at the forefront of best practice.”
In 2023, DIFC recorded a record-breaking influx of company registrations amounting to 1,451 new registrations, a 34% surge compared to 2022 data.
In an exclusive interview with Finance Middle East, the Dubai Financial Services Authority, the chief regulator of DIFC, mentioned the regulation of digital assets as one of the regulator’s key priorities for 2024.
The legislative changes came into effect on March 8, 2024.