DIFC sets new legal standards, announces first digital assets law

Dubai: Dubai International Financial Centre (DIFC) announced the enactment of the world’s first digital assets law, setting a new precedent for the legal framework surrounding digital currencies and assets.

As the digital era accelerates, there’s a pressing need for laws that reflect the current technological landscape. DIFC, a prominent financial hub, responds by crafting legislation that addresses the nuances of digital asset transactions.

This pioneering law establishes a clear legal status for digital assets, providing a solid foundation for investors and users to engage with confidence in the evolving digital economy.

The enactment followed a thorough review and a period of public consultation in 2023, ensuring that the law reflects a broad consensus and is robust enough to stand the test of time.

Significant amendments were made to existing DIFC laws, including the law of contracts and obligations, to accommodate the unique aspects of digital assets.

The law introduces provisions for electronic transferable records, enhancing the efficiency and security of digital transactions and enabling the use of smart contracts.

Recognizing global trends, DIFC has updated its secured transactions framework to facilitate credit extension and collateral arrangements involving digital assets.

The new law of security replaces the outdated 2005 version, incorporating modern principles from international models like UNCITRAL’s secured transactions law, ensuring DIFC’s alignment with global standards.

The revamped securities regime offers clarity and enhanced protections for dealing with digital asset securities, ensuring that DIFC remains a competitive and secure financial centre.

Jacques Visser, chief legal officer at DIFC Authority, highlighted the law as a milestone in property law regarding digital assets.

“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”, said Jacques.

This legislation positions DIFC as a leader in digital asset regulation, influencing global standards and practices in the financial industry.

The new digital assets law is expected to have a far-reaching impact, shaping the future of digital trade and investment and reinforcing DIFC’s standing in the global financial community.

DIFC’s enactment of this trailblazing digital assets law marks a significant milestone in the legal and financial industry, promising to enhance the security, clarity and efficiency of digital asset transactions globally.