The United Arab Emirates (UAE) has announced plans to introduce new rules that would allow the initial coin offerings (ICOs) to be used as a method of raising funds for local companies.
According to a Reuters forecast published on Monday, the rules planned for introduction in 2019 will allow firms to raise capital through sales of cryptocurrency as an alternative to traditional methods of raising funds, such as IPO.
The news was disclosed by the head of the UAE Securities Observer Obeid Saif al-Zaabi, who said at the seminar today:
«The Emirates Securities & Commodities Authority Board approved the consideration of ICO as a sale of securities. In accordance with our plan, we need to introduce local rules in the first half of 2019.»
“The draft rules covering ICO are already being developed by the regulator together with foreign advisors,” said Zaabi, adding that the regulator is also working with stock markets in Abu Dhabi and Dubai to prepare trading platforms for new digital assets.
Reuters points out that in recent years, fluctuations and the low price of oil, as well as the weakness of the stock market, have reduced the IPO activity in the UAE. In addition to providing a legal basis for an ICO, a country can also develop a new law to increase the number of IPOs, allowing family owners to sell up to 100 percent of firms under their control.
When the new rules for the ICO come into force, the UAE will become one of the countries in the world that have implemented the regulatory framework for the blockchain financing method. Malta, for example, passed several bills to provide a legal basis for ICO, cryptocurrency, and blockchain technology earlier this year as part of its plan to become Blockchain Island. Bermuda also hopes to attract more businesses to the island, providing legislation that would allow an ICO to be held under certain conditions.