UAE Securities Regulator To Regulate ICO Tokens As Securities

ICO News, News, Regulation | September 11, 2018 By:

The United Arab Emirates’ Securities and Commodities Authority (SCA) has approved a plan to regulate initial coin offerings (ICO) and recognize tokens as securities.

SCA chairman and Minister of Economy Sultan bin Saeed Al Mansouri said on Sunday that the approval comes after a review of best practices in other countries.

The adopted plan address the full range of issuance cycle associated with ICOs, including “the type of issue (private/public), the entities that can make the issuing and the legislative requirements thereof, such as, inter alia, registration and fees, the blockchain operators, the targeted entities by issue type, the minimum content of the prospectus (whitepaper), liability thereof, and whether registration is or is not required by issue type.”

During the meeting of the Board of Directors of the SCA, they discussed the licensing requirements for the platform of issuance, trading, clearing, listing, custody, settlement and payment to be defined as a central trading, custody, clearing, and depository platform, as well as the legal form to be taken by such platform. Furthermore, the presentation addressed the regulation of listing and trading of such securities, smart contracts used in the securities, the opening and registration of an e-wallet on the blockchain, especially the know your customer (KYC) and money-laundering requirements.

The decision signals a change in the securities regulator’s position regarding ICOs. In a circular issued in February of this year, it warned investors about token-based fundraising activities, citing a lack of protection mechanisms as one of its concerns.

“ICO information made available to investors may be unaudited or incomplete and may present a given investment case in an unbalanced and misleading manner (by emphasizing the potential benefits while overlooking risks, for example),” the circular said.