The Dubai International Financial Centre (“DIFC”) announced on 28 September 2023 developments of the New Digital Assets Law (“DAL”) by way of Consultation Paper No. 4 of 2023, “the New Law of Security” by way of Consultation Paper of No. 5 of 2023, and related amendments to select legislation, in order to adapt to the developments of the global economy in the area of digital assets.
Key Takeaways of the New Digital Assets Law
The DIFC commenced a consultation process for its proposed DAL, which seeks to establish a robust regulatory framework to govern the use and trade of digital assets within the DIFC jurisdiction.
The DAL aims to establish clarity on the following:
1. Legal Characteristics of a Digital Asset: the treatment of digital assets as a matter of property law, establishing whether it is a property, and if so, what type of property it is.
2. Technical Requirements: the essential technical requirements for the composition of a digital asset.
3. Acquiring and Transferring Digital Assets: guidance on how one acquires and transfers title to a digital asset.
4. Consumer Protection Policies: emphasizes on transparency and the legal stand-point upon interference with the use of a digital asset.
5. Market Conduct Standards: promotes a fair and efficient digital assets market, maintaining DIFC’s reputation as a trusted financial hub.
Key Takeaways of the New Law of Security
In parallel, the DIFC is introducing the New Law of Security to enhance the legal framework surrounding security interests. This law aims to provide clarity and efficiency in securing financial transactions within the DIFC.
The New Law of Security aims to establish clarity on the following:
1. Expanded Scope of Security Interests: broadens the scope of assets that can be used as security interests, providing greater flexibility for parties entering into financial transactions.
2. Creation of a Centralized Security Register: considers the establishment of a centralized security register to streamline the process of registering security interests, in a move towards increased transparency.
3. Priority Rules: includes clear rules governing the priority of competing security interests, providing a structured framework for resolution in case of conflicts.
4. Promoting Affordable Credit: promotes credit at reasonable costs, by increasing the availability of secured credit; this shift is intended to benefit both creditors and debtors.
5. Transparency: by allowing registration of a notice in a general security rights register, this shall enhance transparency, although this may not be applicable to specific asset types.
The consultation period has ended, and we await the potential passing of the legislation for further guidance on the use and trading of digital assets in the DIFC.
For a detailed examination of the new legislations to be passed, you can access the consultation papers on the DIFC legal database.
Romain Rolland
Logaina M Omer
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