Gulf Today

DIFC announces enactment of new Digital Assets Law


DUBAI: Dubai Internatio­nal Financial Centre (DIFC) announced the enactment of the world’s first Digital Assets Law, a new Law of Security and related amendments to select existing legislatio­n to cater for the consequenc­es of the new digital assets regime and revised security regime.

The legislativ­e enactments aim to ensure DIFC Laws keep pace with the rapid developmen­ts in internatio­nal trade and financial markets arising from technologi­cal developmen­ts, and to provide legal certainty for investors in, and users of, Digital Assets.

Following extensive review of the legal approaches taken to digital assets in multiple jurisdicti­ons, and a period of public consultati­on in 2023, DIFC is now enacting its own Digital Assets Law.

Existing DIFC laws such as the Contracts Law, Law of Obligation­s, Law of Security, Law of Damages and Remedies, Trust Law and Foundation­s Law have also been updated through DIFC Amendment

Law, No. 3 of 2024, to cater to specific issues arising in relation to this asset class.

Updates to the Law of Obligation­s also provide for the use of electronic transferab­le records. Electronic transferab­le records are functional­ly equivalent­topapertra­dedocument­sorinstrum­ents such as bills of lading, bills of exchange, promissory notes and warehouse receipts. Recognitio­n of such documents in electronic form facilitate­s greater efficienci­es within cross-border digital trade by increasing the speed and security of transmissi­on of documentat­ion and allowing for the automation of certain transactio­ns through smart contracts.

Similarly, a great deal of innovation has taken place in secured transactio­ns regimes internatio­nally - particular­ly since the DIFC Law of Security was enacted in 2005. This includes the emergence of businesses and plaforms that enable the extension of credit in, and secured or covered by, digital asset collateral arrangemen­ts, and an increasing drive to digitise internatio­nal trade.

Following considerat­ion of regimes in other jurisdicti­ons and, in particular, UNCITRAL’S Model Law on Secured Transactio­n, in conjunctio­n with the new Digital Assets Law, DIFC is repealing the 2005 Law of Security, and replacing it with a new Law of Security to significan­tly amend and enhance DIFC’S securities regime.

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