Central Bank of UAE announces new regulations for Digital wallets and payment services
In a press release issued on November 3rd 2020, the UAE Central Bank issued a new regulation on Stored Value Facilities (SVF). As per the website the new regulation will ensure that stored value products and services are operated in a secure, sound and efficient manner in the UAE. According to the press release the new regulation for SVFs will facilitate fintech firms and non bank payment service providers easier access to UAE market while continuing to safeguard the customers’ funds, ensure proper business conduct and support the development of payment products and services.
The scope of this regulation includes licensing, supervision and enforcement provisions applicable to the companies, which are licensed to provide SVF. A one- year transitional period will commence on the date when the regulation comes into force. Firms already holding an SVF license granted under the previous regulatory framework may continue operating. Nevertheless, they are required to complete the implementation of the relevant measures set out in the new regulation by the end of the transition period.
H.E. Abdulhamid M. Saeed Alahmadi, Governor of the Central Bank of the UAE, said: “We are confident that the new SVF regulation will strengthen the public’s confidence in the use of digital products and services and foster further development and innovation across the payments industry.:
He adds, ” The new regulation constitutes an important milestone in the continued development of a robust regulatory framework for stored value facilities and the digital payments industry as a whole. It is in line with the CBUAE’s objectives aimed at safeguarding the stability and integrity of the financial system and payment infrastructure in the UAE, and facilitating further development of digital payments. This regulation will ensure a level playing field for market participants and will help maintain the UAE’s status as an international financial centre and a leading payment hub.”
So what does this mean for crypto currency holders or digital currency holders. It means that users can now actually store these digital currencies in their own digital wallets or with custodians. It also means that crypto or digital currencies holders can use these digital currencies to make payments, P2P lending, remittances and other forms. In 2017 the UAE Central Bank came out with regulation for stored values and electronic payments, with today’s regulation it would be an update to the original announced in 2017.
The new regulation has not yet been posted on the UAE Central Bank website, UNLOCK will update once it has.
This new regulation comes just after the UAE Securities and Commodities Authority approved the legislation on crypto assets., and actually issued the new crypto law on November 3rd 2020. Both the UAE Central Bank digital wallet and digital currency regulation and SCA UAE’s crypto assets regulation will work together to enhance the crypto currency, digital assets, and blockchain ecosystem in the region.