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Abu Dhabi, UAESunday 16 December 2018

UAE central bank nearing conclusion of virtual currency review

Study on bitcoin may result in new regulations

Chainalysis, a provider of anti-money laundering software, estimates 10 per cent of money intended for initial coin offerings were looted away by scams such as phishing so far this year.  Roslan Rahman / AFP
Chainalysis, a provider of anti-money laundering software, estimates 10 per cent of money intended for initial coin offerings were looted away by scams such as phishing so far this year. Roslan Rahman / AFP

The Central Bank of the UAE is close to finishing a review of virtual currencies that may result in new regulations on the use of digital currencies like bitcoin, a person familiar with the situation said.

The review, among other things, is looking at ways other governments around the world have responded to the challenge of digital currencies which have been favored by criminals and money launderers due to lack of regulations.

The central bank did not immediately respond to an e-mail seeking comment before the National went to print.

Bitcoin is legal in the UAE despite confusion following a circular at the beginning of the year on rules for digital payments in the UAE. While the regulatory framework stated that "all virtual currencies (and any transactions therof) are prohibited," the central bank governor told Gulf News that bitcoin and other virtual currencies were exempt from the regulations.

“These regulations do not cover ‘virtual currency’, which is defined as any type of digital unit used as a medium of exchange, a unit of account, or a form of stored value," Mubarak Al-Mansouri told the newspaper in February. "In this context, these regulations do not apply to bitcoin or other crypto — currencies, currency exchanges, or underlying technology such as Blockchain.”

Mr. Al-Mansouri said the bank was reviewing its policies on virtual currencies.

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Bitcoin tumbles as China bans initial coin offerings

US arrests of Russian cyber criminals hit record high

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Bitcoin and other virtual currencies, which have seen massive growth in the past couple of years, are starting to face tighter regulations if not being banned altogether by some countries.

Chainalysis, a provider of anti-money laundering software, estimates 10 per cent of money intended for initial coin offerings were looted by scams such as phishing so far this year, according to Bloomberg. China plans to ban trading of bitcoin and other virtual currencies on domestic exchanges, dealing another blow to the $150 billion cryptocurrency market after the country outlawed initial coin offerings last week.

Bitcoin has started to gain traction in the UAE, making the need for clearer regulations more urgent. Fam Properties, a Dubai real-estate broker, said on Monday that a number of landlords will start accepting Bitcoin payments at City Walk in Jumeirah, a new property development, next month.

"Some of the landlords we're representing in property management at City Walk were very excited by the news because they are Bitcoin traders and they believe that Bitcoin opportunities in real estate will attract educated and savvy tenants," said Firas Al Msaddi, chief executive of Fam.

Last week, two British entrepreneurs said they would accept the digital token to purchase apartments in their 250 million British pound real estate development, Aston Plaza and Residences.