Earlier this year, the U.A.E.’s market regulator issued a warning to investors about initial coin offerings, or ICOs, a new form of crowdfunding underpinned by cryptocurrencies in the largely unregulated fintech industry.
Now, that’s set to change. The U.A.E.’s Securities and Commodities Authority (SCA) this month has come back with a new resolution approving regulations for fintech — a move that will see it treat cryptocurrencies as securities and introduce controls for trading digital tokens.
It comes as governments in the Gulf are taking a close look at fintech in general, which covers a broad range of innovations in the financial services industry. Cryptocurrencies, in particular, have come under scrutiny, due in part to the emergence of ICOs and the volatility of Bitcoin.
Still, the SCA provided few details with regards to its larger plans for fintech regulations. A statement announcing the resolution reported the SCA has developed a plan that includes a set of mechanisms to regulate digital securities and commodities, with elaborating.
“In light of the rapid development of the digital tokens market and the response thereto by the regulators in a number of countries worldwide towards regulating the initial coin offerings (ICOs), the SCA Board of Directors has approved the SCA plan to regulate the ICOs and recognize them as securities,” reads the statement.
The move follows similar steps aimed at cryptocurrencies taken in the U.A.E. In June, the Abu Dhabi Global Market launched a framework to regulate spot crypto asset activities, including those undertaken by exchanges, custodians and other intermediaries within its jurisdiction. For its part, the Dubai Financial Services Authority issued a warning against cryptocurrencies and ICOs in late 2017.
The scrutiny isn't surprising. Globally, cryptocurrency sales from successful ICOs totaled $13.7 billion in the first five months of 2018, a tally that is nearly double the amount taken in all of last year, according to a recent report from consulting firm Strategy& and Switzerland-based Crypto Valley Association. The report tallied 537 ICOs so far in 2018 after last year saw 552 ICOs raise a total of $7 billion.