Existing DIFC laws on contracts, obligations, security, among others, have also been updated
Dubai International Financial Centre (DIFC) announced the enactment of the world’s first Digital Assets Law, a new law of security and related amendments.
The legislative enactments aim to ensure DIFC laws keep pace with the rapid developments in international trade and financial markets arising from technological developments, and to provide legal certainty for investors in, and users of, digital assets.
Existing DIFC laws such as the contracts law, law of obligations, law of security, law of damages and remedies, trust law and foundations law have also been updated.
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What do the law changes include?
Updates to the law of obligations also provide for the use of electronic transferable records. Electronic transferable records are functionally equivalent to paper trade documents or instruments such as bills of lading, bills of exchange, promissory notes and warehouse receipts. Recognition of such documents in electronic form facilitates greater efficiencies within cross-border digital trade by increasing the speed and security of transmission of documentation and allowing for the automation of certain transactions through smart contracts.
Similarly, a great deal of innovation has taken place in secured transactions regimes internationally – particularly since the DIFC law of security was enacted in 2005. This includes the emergence of businesses and platforms that enable the extension of credit in, and secured or covered by, digital asset collateral arrangements, and an increasing drive to digitise international trade.
Jacques Visser, chief legal officer at DIFC Authority, said: “DIFC is excited to announce the enactment of its Digital Assets Law. We consider this legislation to be groundbreaking as the first legislative enactment to comprehensively set out the legal characteristics of digital assets as a matter of property law, and to provide for how digital assets may be controlled, transferred and dealt with by interested parties.”
“At the same time, we are also enacting a new Law of Security, replacing the 2005 law. The revised regime is modelled on the UNCITRAL Model of Secured Transactions and significantly enhances DIFC’s securities regime to keep pace with international developments in this field and to ensure DIFC remains at the forefront of best practice,” he added.
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