United Arab Emirates to Approve ICOs as ‘Securities’ in 2019 to Boost Corporate Funding

October 9, 2018 9:15 AM UTC

The United Arab Emirates (UAE) is pressing ahead with plans to introduce initial coin offerings (ICOs) as means toward fundraising for companies and startups in 2019.

In an effort to boost financing in capital markets, the UAE will enable domestic companies to raise funding by offering cryptocurrency tokens to investors alongside traditional means like shares issued in an initial public offering (IPO), Reuters reported.

Specifically, ICOs will be considered as ‘securities’ by authorities under regulations, currently in draft, enforced early in 2019.

Speaking at a seminar, UAE securities market watchdog chief Omar Saif al-Zaabi said:

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

The ESCA is currently drafting ICO regulations with unnamed intentional advisers. The watchdog is notably working alongside Abu Dhabi and Dubai stock markets to develop crypto-friendly trading platforms to support ICOs, the official added.

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Nearly a year ago to the day, Abu Dhabi – the UAE’s largest emirate – issued guidelines on cryptocurrencies and ICOs, regulating the latter as ‘securities’. Cryptocurrencies, while not classified as legal tender, are considered commodities by the government of Abu Dhabi.

The report suggests that a combination of low oil prices and laboring equity markets over several years has ‘severely’ dented IPOs, dealing a blow for domestic companies looking to raise finances in the UAE and wider Gulf region.

Authorities are taking measures to check the drain, with a new law that enables family-owned businesses to sell a majority of even 100 percent stakes in their companies with IPOs. If approved by the UAE’s prime minister, the new law will take effect in 2019. Further, the watchdog is also considering a mandated minimum of 20% women members in boards of publicly listed companies as a step toward equality in addition to encouraging female investors.

Featured image from Shutterstock.

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Last modified: June 10, 2020 10:47 AM UTC