Background and Purpose
The Dubai International Financial Centre (DIFC) has enacted Digital Assets Law No. 2 of 2024, which updates existing regulations significantly. This new law offers a precise legal definition of digital assets and outlines the procedures for their control, transfer, and management. The new legislation greatly strengthens the DIFC’s securities regime, delivering enhanced clarity, certainty, and security for digital asset investors and users.
How does the new law define digital assets?
Digital assets are defined as entities created by software and network operations, independent of specific people or legal systems. They cannot be duplicated, and their use by one person impacts others. The law classifies them as intangible property and outlines how control and ownership can be established and transferred.
The law classifies digital assets as intangible property, distinguishing them from tangible possessions and rights. It also specifies the criteria for determining control over a digital asset and the process for transferring ownership, as detailed in Section 9.
Effects on the DIFC and Blockchain Industry
The legislation positions the DIFC as a leading jurisdiction for blockchain and digital asset activities, providing a clear legal framework that promotes innovation and market opportunities.
Additional Notable Amendments
- Contracts Law: Introduces “Coded Contracts,” which are self-executing and used in blockchain.
- Law of Obligations: Includes “Electronic Trade Documents” for digital assets, affecting international trade.
- Control and Recovery: Provides guidelines for controlling and recovering digital assets in case of impairment.
- General Rules: Defines title, transfer, and rights over digital assets in various situations.
Legislative Amendments
The following laws have been revised to incorporate provisions related to digital assets:
- Contracts Law: Adjustments to address the inclusion and management of digital assets in contractual agreements.
- Implied Terms in Contracts and Unfair Terms Law: Revisions to reflect digital assets within implied terms and to prevent unfair terms involving digital assets.
- Insolvency Law: Changes to handle the treatment and distribution of digital assets in insolvency proceedings.
- Law of Obligations: Amendments to cover obligations related to digital assets.
- Law of Security: Updates to address the security interests and collateral involving digital assets.
- Law of Damages and Remedies: Modifications to include remedies and damages associated with digital asset disputes.
- Personal Property Law: Revisions to recognize digital assets as personal property and outline related rights.
- Trust Law: Adjustments to manage digital assets within trust arrangements.
- Foundations Law: Changes to address the use and management of digital assets within foundations.
Overview
The New Digital Assets Law highlights the DIFC’s commitment to creating a transparent and robust legal framework that aligns with advancements in digital assets and global financial markets, thereby offering enhanced legal certainty for stakeholders and investors
If you are contemplating establishing a Foundation in the DIFC, need to understand the implications of the proposed changes, or have any questions or concerns about the amendments, we invite you to contact our office in Dubai recognized as best law firm in Dubai.
With our extensive experience and expertise in navigating the DIFC legal and regulatory landscape, we are well-equipped to help you manage the requirements and seize the opportunities presented by the Regulations. Do not hesitate to seek our best services to ensure your rights are protected and your goals are achieved safely and efficiently.
This article along with any accompanying commentary, should not be considered as legal advice. The content reflects the author’s opinions at the time of writing, which may change over time due to varying objectives, circumstances, or facts.