The United Arab Emirates (UAE) has introduced a new law that will make criminals of crypto scams up to five years in prison and up to $272,000 in jail. The development follows the much-anticipated DubaiCoin scam, which introduced itself as the country’s official cryptocurrency.
The United Arab Emirates (UAE) has implemented a new cybercrime law that would impose a maximum penalty of 1 million dirhams (about $272,000) and five years in prison for running a cryptocurrency scam. Local media outlets reported that the new amendment to the online security law will go into effect from January 2022.
However, the law also refers to “unrecognized cryptocurrencies,” which may have some room for interpretation. Josh Kemp, partner at ADG Legal, said of the incident,
Any person who promotes, advertises or encourages behavior in cryptocurrency that is not officially recognized in the United Arab Emirates, or does so without a license, is subject to the penalty of detention, or The fine is between Dh20,000 and Dh500,000.
The UAE is working on cryptocurrency regulation, partly due to the rise in scams. The most famous of these was DubaiCoin, which presented itself as the country’s national cryptocurrency.
The authorities issued a statement saying that the DubaiCoin cryptocurrency was nothing more than a scam, but a hefty sum of money was stolen anyway. Like most scams, the creators of DubaiCoin tried to make Charioteer as legit as possible.
The UAE does not ban cryptocurrencies outright, and they can be traded on exchanges. However, it does not recognize them as legal tender. Like most other countries, the UAE is keen to regulate the asset class and ensure the safety of consumers.
Expect more regulation as crypto scams and hacks rise
The UAE’s decision to impose fines and jail time for scams is expected, and is something many countries are leaning towards. Funds stolen from hacks in the DeFi sector alone amounted to more than $474 million in the first seven months of 2021.
Countries are preparing regulations for various aspects of the crypto market. These include taxation, investor protection and securities registration.
As more capital enters the market, institutions in the space will want to ensure that there are tighter security and measures to prevent scams. Failure to do so will risk the wrath of regulators, as in the case of the United Arab Emirates.