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Initial coin offering regulations in the first half of 2019

Market regulator working with consultants, law firms to boost capital markets

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Obaid Al Zaabi, chief executive officer of the Securities and Commodities Authority (SCA)
Gulf News

Abu Dhabi: The UAE plans to launch initial coin offerings (ICO)s in the first half of 2019 to boost capital markets, Obaid Al Zaabi, chief executive officer of the Securities and Commodities Authority (SCA), said in Abu Dhabi on Monday. The move will allow companies to issue crypto tokens instead of shares.

Al Zaabi said that the SCA board had already given the green light for the regulator to consider ICOs as securities. The SCA is working on regulations with international companies.

“We will be selective and they will be tangible ICOs connected with real assets,” he said. “We are going to have regulations on the ground in the first half of 2019. This is the first time in the GCC and we will be the pioneers in this. We are working with consultants and international law firms on this.”

He did not provide further details.

Al Zaabi also said they are going to issue new regulations on bonds, sukuks and securitisation in the first half of next year.

“We will put solid requirements on sukuk issuance. Also the governance laws will be local laws. They should comply with the local laws, not the common English laws or the other foreign laws,” he said while speaking to reporters on the sidelines of an event organised by the SCA on Monday.

The authority also has submitted proposals to the competent authorities to scrap the maximum cap set for the sale of shares by shareholders when companies convert to joint-stock businesses.

The current companies law has set 30 per cent as the maximum limit for selling shares.

Al Zaabi said that the move will be carried out in compliance with international practices and industrial requirements.

On foreign ownership, he said the authority is currently working on two approaches. The first consists of the authority encouraging listed companies to increase the rate of foreigners’ ownership of shares to reach the set percentage of 49 per cent, while the second approach concerns the authority working with the Ministry of Economy to draft a new investment law.

He also pointed out that the SCA is working with UAE financial markets to provide a special platform for SMEs, which is expected to be announced by the beginning of 2019.

The SCA is also working to redraft regulations which will extend the power of penalties, supervision and enforcement according to International Organisation of Securities Commissions (IOSCO) principles.

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