Financial consultants, bankers and investors usually fail to understand the true concept behind investment in cryptocurrency, and yet we cannot blame them for unsolicited information available through varied platforms. Thus, Corporate Lawyers of Dubai will walk you through the whole path of cryptocurrency from its emergence until now.

The term Bitcoin, Cryptocurrency and blockchain were peculiar for the

world until Satoshi Nakamoto an unrecognized inventor of Bitcoin

announced in late 2008 about Electronic Cash System. The concept flooded

in world's market like rapid fire and investors around the globe built a

crypt currency market for buying and selling. UAE was also unknown and

unfamiliar to this concept until the tides of elevated profit hit the

market as compared to the current picture where world's first

cryptocurrency deep "cold storage" entities are established and

functioning in UAE.

The Definition

It is an innovation and a virtual currency that uses cryptography, a

procedure to convert legitimate information into an unbreakable code in

order to track buyers and sellers. The need for such secure

communication arose and evolved in the digital era with the aid of a

secure online platform. This currency is operated by way of blockchain

technology in contrast with fiat currency where one authority such as

central bank regulates the currency. Cryptocurrency seeks their

validation from a decentralized system wherein an investor participating

in the process can seek verification. Particularly, Nakamoto benefitted

the process of blockchain technology and created the infamous Bitcoin.

Laws of UAE regulating Cryptocurrency

FSRA-ADGM (Financial Services Regulatory Authority of Abu Dhabi

Global Market) was the first in line to issues guidelines and

regulations in relation to activities of buying and selling

Cryptocurrency. The guidelines were regarding the regulation of Initial

Coin Offerings (ICO) and virtual currencies wherein, the public at large

can purchase and sell Cryptocurrency. FSRA-ADGM will determine the

specific commodity on the case to case basis. The objective of ADGM

regulations if to increase transparency and to restrict money-laundering

activities and to combat financial terrorism.

Inspired by ADGM regulations, DMCC (Dubai Multi Commodity Authority)

has provided an opportunity for investors to incorporate a business of

trading in Cryptocurrency. However, companies would only be allowed to

trade on their own behalf. Accordingly, such companies can establish the

world's first

Cryptocurrency deep "cold storage" cellar.

In an offer to become a pioneer in blockchain innovation, the UAE has

propelled the UAE Blockchain Strategy 2021, as per which half of the

government exchanges will be directed utilizing blockchain innovation by

2021. To consolidate its vision, rules and regulations on the

utilization of crypto resources, including cryptographic forms of money,

have recently been issued.

Prior to the issuance of ADGM regulations, the Central Bank of UAE in

2017 promulgates a regulatory framework regarding the Electronic

Payment System entailing all virtual currencies and transactions being

restricted, setting a high alarm in UAE market. However, post receiving

an unsatisfactory review, the governor of Central Bank clarified that

the regulations would not be applicable to Cryptocurrency. In spite of

this confirmation, UAE still awaits for legalized regulations which one

may resort to in order to understand the validation of cryptocurrency or

to seek a claim against frauds in virtual currency.

Crypto Fraud and Future

The dubious behaviour and presence of Cryptocurrency in the market

make it treacherous for investors as it can turn out to be Ponzi scheme

to steal money. The basic ideology behind Cryptographic money makes it

arduous to prevent theft as any crypto asset is stolen cannot be traced

and returned to the original investor. From past a decade, we have come

across numerous hacks and scams in a crypto world wherein; Coin Check

was the world's biggest crypto theft.

Cryptocurrency is a bubble or a market; we are yet to confirm that

stand. Nonetheless, it has offered the opportunity to billions of users'

entrance to the financial market who otherwise did not even had a bank

account as they fail to meet the relevant criteria to open a bank

account. The current position of Cryptocurrency in UAE is grey, and the

future as of now is colourless. Numerous nations have initiated to issue

guidelines to control the buying and selling of Cryptocurrency and to

prevent the unauthorized usage and avoid financial frauds.