The Dubai International Financial Centre (DIFC), issued an important piece of legislation on digital assets. It is the new Digital Assets Law No 2 of 2024 (the Digital Assets Law), which came into force on 8 March 2024
The content of the law reflects a long process of analysis of the different regulations in different jurisdictions with the aim to significantly improve this regulatory area by providing a finally clear regulatory framework that provides legal certainty for all operators in the digital sector.
Digital assets are a rapidly developing class of innovative assets that therefore need precise legal guarantees and protection, starting with a law that finally and unequivocally defines their exact legal nature with all its consequences. This problem was finally mitigated in the DIFC ecosystem, which in Section 8 of the Digital Assets Law clearly defines a Digital Asset as an asset that:
"(a) exists as a notional quantitative unit manifested through the combination of the active operation of software by a network of participants and network-created data;
(b) exists independently of any particular person and legal system; and
(c) is not duplicable and the use or consumption of the thing by one person or a specific group of persons necessarily prejudices the use or consumption of the thing by one or more other persons".
The law further states that a digital asset is an intangible asset, an asset that is neither an asset in possession nor an asset in action. It goes on to indicate what the necessary conditions must be for a person to be deemed to have control over a digital asset and the manner of its transfer.
These changes are significant and represent a real breakthrough that elevates the DIFC further as one of the strongest jurisdictions for operators dealing with digital assets.
The law also introduces several other interesting novelties by introducing, such as the concept of 'codified contracts', amendments to the Law on Obligations that introduce yet new concepts, such as that of 'electronic commercial document', and general rules on title, the modalities of transfer, and the exercise of rights over digital assets in the event of death, incapacity or insolvency.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.