The crypto industry has seen an immense growth in the last few years, with several countries introducing laws to regulate them.
Cryptocurrencies are digital assets representing value which can be digitally stored, traded, transferred or even used as a payment tool. Unlike legal tender or fiat currency, cryptocurrency is not issued by banks or governments, but is based on a decentralized structure which exists across a public network, allowing it to be outside the control of central authorities.
But with the growing popularity of the crypto industry all over the world and in the UAE, crypto scams have also seen a huge increase.
Crypto scams are unfortunately, a reality and occur on a regular basis with scammers using various techniques and methods to scam buyers and sellers.
In some cases, the trade offers a high return with no explanation, which could be a sign of scam.
In other cases, the scammer may pose as a broker, and offer the buyer and the seller a very profitable deal. Once the scammer has convinced the parties that the deal is worthwhile, he may insist the parties to meet in person for completing the transaction. The buyer would typically bring cash to this meeting and send his account details to the broker. The broker will forward his own account details to the seller instead of the buyer’s, and the seller would end up sending cryptocurrency to the scammer’s account.
In another type of scam, fake crypto coins are bought by the buyer. Fake mobile applications which look like authentic apps, fake crypto websites and emails which appear to be genuine correspondence from a crypto website, are also other forms of scams.
Are there Laws in the UAE regulating crypto currencies?
Yes, at present there are limited laws in the UAE which regulate crypto currencies. For example, the Securities and Commodities Authority Decision No. 23/RM/2020 regulates the offering, issuing, listing and trading of crypto assets in the UAE.
The Emirate of Dubai issued Law No 4 of 2022 on the Regulation of Virtual Assets, which aims to regulate the virtual asset industry in the Emirate of Dubai.
Additionally, Abu Dhabi Global Market also has issued specific regulations on crypto currency activities such as crypto currency exchanges, custodians, intermediaries, brokers etc.
There may also be penalties if you are involved in crypto scams.
Under the Cybercrime Law of the UAE, propagating a cryptocurrency without a license from the competent authorities could lead to imprisonment of 5 years. It could also result in fine of up to 1 million dirhams. This has been provided under Article 41 of the Federal Decree-Law No. 34/2021 Concerning the Fight Against Rumors and Cybercrime.
Article 41 states as follows.
“Everyone calls for or propagates a competition or crypto-currency or creates or manages false portfolio or company to receive or collect funds from the public for investment, management, utilization or development, without license from the concerned bodies, shall be sentenced to detention for a period of not more than (5) five years and/or to pay fine of not less than (250,000) two hundred fifty thousand Dirhams and not more than (1,000,000) one million Dirhams. The court shall order the recovery of the seized funds.”
Further, under Article 48 of the Cybercrime Law, advertising, promoting, mediating or dealing in any form of virtual currency, or crypto currency which is not officially recognized in the UAE or which doesn’t have a license from the competent authority will result in penalties including detention and fines.
Article 48 of the Cybercrime Law states as below.
“Everyone commits either of the following acts through the information network or information technology method shall be sentenced to detention and/or to pay fine of not less than (20,000) twenty thousand Dirhams and not more than (500,000) five hundred thousand Dirhams: 1. Promotion of goods or services through misleading advertisement or misstatements. 2. Advertisement, promotion, mediation or dealing in any form or encouraging the dealing in a virtual currency, cryptocurrency, stored value unit or any payments unit not officially recognized in the state or without license of the competent body.”
It is crucial to be fully aware and informed while dealing with crypto currencies to ensure that you are not being scammed out of your monies. Crypto transactions should be undertaken using licensed and recognized exchange platforms. It is also prudent to confirm the authenticity of the website or online crypto application before providing any personal information or details.