New Rules in United Arab Emirates Will Allow Domestic Companies to Raise Funds with ICOs

Initial coin offerings (ICOs) have been a beneficial way for cryptocurrencies to gauge interest from the public for their tokens, while bringing in funding for additional work. Though there have been some issues with fraud in the industry, the United Arab Emirates (U.A.E.) have decided to add new rules for domestic companies that would let them use ICOs for fundraising.

The new rules aren’t scheduled to go into effect until 2019, but they would give an opportunity for crypto token sales to be used as an alternative to the current methods. Presently, initial public offerings (IPOs) are the traditional methods of fundraising, which is a sale of stocks that works in the same way as an ICO. The only difference between the two is that an ICO involves crypto assets.

Obaid Saif al-Zaabi, the head of the U.A.E.’s securities watchdog, revealed the new rules at a seminar today. He noted,

“The board of the Emirates Securities & Commodities Authority has approved considering ICOs as securities. As per our plan we should have regulations on the ground in the first half of 2019.”

The first draft of the rules that would govern these types of ICOs is already being setup. Regulators in the area are also working to set Abu Dhabi’s and Dubai’s trading platforms up with these laws, preparing for the new digital assets to work within their stock markets.

Much of the reason for bringing in ICOs at this time has to do with the lack of IPO activity in recent years. Low oil prices and unimpressive equities market seem to be to blame, both within the U.A.E. and other nations nearby.

As the country works on the logistics for the newly approved ICOs, they also may be contributing to laws regarding IPOs. These laws would increase the number of IPOs in the industry by encouraging family owners to sell up to a 100% share of their own firms. Right now, Zaabi commented that this type of measure is pending approval, which must be done by the prime minister’s office.

If, and hopefully when, the ICO regulations are integrated to the country, this would make U.A.E. one of the few countries in the world that has managed to bring in regulatory framework for blockchain. Malta is another country that recently decided to do this offering a legal basis for cryptocurrency, blockchain, and even ICOs. They have done such an expert job of this that they’ve been nicknamed “Blockchain Island.” Bermuda is also on board, offering legislation that would open the door for ICOs.