United Arab Emirates:
Crypto Scams – What Are Your Legal Defense And Guide To Avoid Being Scammed?
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The concept of Cryptocurrency or digital currency has taken the
world by storm. The most popular versions being the
‘Bitcoin’ and ‘Ethereum’. Even the people who do
not understand the crypto fad are well-versed in ‘Bitcoin’
and its decade long bull run in valuation. The rise of
‘Bitcoin’ has been so significant that the term has become
synonymous with the term ‘Crypto’.
A cryptocurrency can be understood as a digital currency that
can be used to buy goods and services functioning on blockchain
technology and online ledger record. The most attractive benefits
that crypto’s offer is its decentralization, avoidance of
banking fees, speedy transactions, and high level of
confidentiality in comparison to the traditional transaction model.
Blockchain technology how now progressed even further to add in
smart contract functionalities that are proposed to be
revolutionary at best.
Despite the allure that cryptocurrencies offer, there are some
core legal issues that should be well understood to ensure that you
are not lured into a scam.
Cryptos are not regulated security:
Cryptocurrencies by their very nature, aim to remain
decentralized and hence they do not constitute a conventional
currency that is issued by a monetary authority with firm checks
and balances incorporated. Cryptocurrency is instead supplied as a
crypto stock on various exchanges, and they do not constitute
‘listed securities’. They are intended to provide many of
the same functions as long-established currencies such as the U.S.
dollar, Euro or Japanese yen; however, they are not backed or
insured by any monetary authority or government. Although, it is
seen that some countries are now slowly moving towards this, with
Republic of El Salvador becoming the first country to legalize
Due diligence is the key:
Making maximum use of the unregulated crypto market, fraudsters
are at work to lure people into investing in bogus cryptos.
Recently there was big hype on buying in on ‘Dubai Crypto
Currency’ which turned out to be a scam. The Dubai
government took action and issued a statement to warn the
public to be vary of the false information being circulated.
Further, the UAE central bank has reaffirmed that it neither
accepts nor acknowledges any cryptocurrency in the UAE and that the
only recognized legal tender remains to be the UAE Dirham.
When investing in cryptocurrency, choose only the exchange
platforms that are regulated in your jurisdiction. Enquire about
their license and check for regulatory approval from the Dubai
Financial Services Regulatory Authority (DFSA) or Abu Dhabi Global
Market (ADGM). Also, read and understand about any ‘voluntary
liquidation’ clauses that such exchanges might have. Further,
enquire about their security features, including cold storage and
about your options to store your purchased cryptos in Crypto
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.
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