The Central Bank denies accepting the crypto assets as legal money



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The Central Bank has issued a “Stored Values ​​Facility System” and is in the process of issuing a “Retail Payment Service System” that will define the regulatory treatment of crypto assets. In light of the allegations reported by several publications that the “Central” has implicitly “dyed the legal character” on cryptocurrencies in the UAE, the bank clarified the purpose of the recently published “Stored value facilities system”.
The central bank noted that it currently does not accept (or approve) encrypted or virtual assets as legal tender which is absolute liability in the emirates, because the UAE dirham is the only legal currency with absolute discharge power in the country.

The UAE dirham is the only legal currency with absolute discharging power

The “Stored Values ​​Facilities System” aims at licensing institutions that issue or provide stored value facilities in the UAE. As defined in the system, stored value facilities are facilities where an amount of money or the value of money is accepted (which may include, among other elements, crypto or virtual assets) in exchange for storing the value of the money. Since the Central Bank of the United Arab Emirates does not currently recognize crypto assets as legal entities with absolute liability in the United Arab Emirates, it cannot recognize these assets as a payment and can only be used as investment assets with a high potential risk.
The Central Bank is currently working on preparing a new system called the “Retail Payment Service System”, which incorporates the concept of payment tokens defined as cryptocurrency assets, backed by a fiat currency and used for payment purposes.
By launching the new “stored value facility system”, the “Central” aims to facilitate the entry of financial technology institutions (fintech) and non-bank payment service providers into the UAE market, while continuing to protect clients’ money, Ensure proper workflow, and support the development of payment products and services. .

Facilitate the entry of financial technology institutions (fintech) and non-bank payment service providers into the UAE market

Major improvements are included in the new version of the “stored value facility system” compared to the previous version, and include allowing the non-bank payment service providers to obtain a license without the need to establish a company together with a licensed bank , And where the licensed bank is the major shareholder; Reduce capital requirements from 50 million dirhams to 15 million dirhams; Allow indirectly digital customer listings instead of physical verification.
The new “stored value facilities” system provides the appropriate infrastructure for direct competition among market participants and promotes competition and innovation in stored value products and retail payment services, by removing some restrictions on licensing, to encourage the entry of fintech institutions and various Non-bank payment service providers.

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