Recent trends in UAE payments regulatory environment has become a highlight in the legal status of blockchain technology involving bitcoins or cryptocurrency. Beginning from Central Bank’s “Regulatory Framework regarding stored values and electronic payment methods” which assist in adopting secured virtual payment techniques and 2021 Emirates Blockchain Strategy reflects the positivity towards adoption of new technology in light of new era. Albeit, the technology is yet new and immature, the corporations dealing in blockchain technologies can be seen in vast number. Ergo, Commercial Lawyer of Dubai will focus on the legal status of the Blockchain Technology in UAE and legal issues in adopting blockchain strategy encountered by public or private companies.
Understanding the technicalities, blockchain is ever-increasing list of records referred to as “blocks” linked with cryptography. These blocks utilize the cryptographic validation to form a chain. Simply, it is an open, distributed ledger of records that has the ability to record transactions between two parties in a secured manner.
Blockchain strategy is now not only utilized for decentralized transactions but for smart contracts or transactions automatically generated through a software code programmed by two or more parties. Smart contracts are not referred to as accurate contract in legal sense. In vast legal industry, smart contracts will be used by various users especially by law firms as it intends to substitute old paper contracts. Smart contracts must be legally relevant, they may hold the structure of conventional contracts, such as an offer, acceptance, and parties’ mutual motive fulfill contractual obligations. Additionally, smart contracts should be open-ended and interactive via presenting means of control and execute compulsory amendments. Nevertheless, it’s far essential to expect this technology with respect to technological advancement that will allow easy adoption and implementation.
Federal Law Number 1 of 2006 regarding Electronic Transactions and Commerce has apparently confirmed the legality of smart contracts developed through computer programs. This is in accordance with Article 12 of the Law.
The government of Dubai has explicitly recognized that blockchain technology by introducing Dubai Blockchain Strategy based on Blockchain Technology. The strategy is an outcome of alliance of Dubai Future Foundation and Dubai Smart Office who are responsible for its implementation and execution. There are a few critical formidable efforts to utilize the new technology in the judicial system in the UAE. Recently, the Dubai International Financial Centre (DIFC) Courts have collaborated with Dubai Smart Office to establish the first ever court for blockchain issues. Consistent with the present legal redresses for dispute resolution, the collaboration will firstly scrutinize the way to verify foreign judgments. It is geared towards organizing the judicial procedures and to avoid duplicity of documents. By 2020, Dubai aims to become the city based on blockchain technology with a paper-free virtual environment allowing statistics to be saved in a digitally at ease, verifiable and incorruptible form.
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