Dubai also wants to become a global hub for cryptocurrencies as well as the Government in Dubai endorses blockchain and crypto adoption. For achieving this target, Dubai Government has commenced a project which aims at developing a “Crypto Zone” in Dubai. The zone is proposed to be developed within the iconic building of “Dubai World Trade Center”. The private sector’s help too has been sought for completing the project. Global crypto firm, Binance, has been the first company from the private sector to join hands with authorities in Dubai for the Crypto Zone project.
In addition, Dubai’s crypto space is one of the quickest growing industries in the world. Yet, the industry is also living under the fears of crypto pyramid schemes. These schemes were there in the past and can be found even today.
A law regarding cryptocurrencies has been introduced in United Arab Emirates (UAE) which will come into force on 2nd January 2022. Under the law, civil and criminal liabilities have been imposed against people operating or prompting crypto pyramid schemes. The liabilities include the imposition of a fine to the tune of US$ 270,000 plus 5 years imprisonment as well.
UAE already had in place laws that dealt with cryptocurrencies. For instance, the law was which strictly discouraged people in UAE from prompting crypto schemes. However, even then, people were promoting crypto schemes which also involved a few pyramid schemes. But the existing law was silent and rather toothless against its offenders. It was therefore felt that the law should be empowered with liabilities so as to enforce it in its true sense and spirit.
Quoting the new law, an attorney in UAE said that section 41 of the law provides imposition of fines and imprisonment. For example, the law suggests that if misleading or false ads are found then the promoter of the ads may face fines to the tune of US$ 136,100 maximum. Along with the fine, the offender can be sent to jail for serving a maximum of 5 years imprisonment, said the attorney. The law would further be enforced upon the people who are found prompting any unauthorized cryptocurrencies in the UAE.
The attorney argued that even the earlier law, particularly Section 48 ibid, provided for the imposition of fines and imprisonment. However, the amount of fine was not so big and the implementation of the law was almost to none.
Authorities in UAE are of the view that they need to clean online space from financial crimes for visitors, consumers, and investors. UAE saw a huge increase in the number of crypto pyramid schemes this year. A scheme called “Dubai Coin” was one of the most prominent crypto pyramid schemes that were once active in Dubai. The issue was so serious that Dubai Government had to issue a clarifying statement. In that statement, the Government informed the public that it was not associated with or recognized the scheme.