KHALED AL KHAWALDEH (ABU DHABI)
Earlier this week, a highly publicised Dubai court case made global headlines when it was reported that the court had ordered the payment of 5,250 EcoWatt tokens as part of a settlement for wrongful dismissal.
The ruling marks one of the first high-profile cases where cryptocurrency as a form of payment was officially validated by a UAE court, sparking considerable excitement in the industry. However, despite this enthusiasm, the ruling is unlikely to lead to digital currencies being used to pay salaries in the near future.
Instead, the ruling validates virtual currencies as a legal "perk" that companies can offer in addition to regular remuneration. Faraz Salat, a Legal Consultant at Awatif Mohammad Shoqi Advocates & Legal Consultancy, suggests that this move could help bolster the virtual asset industry in Dubai and across the country.
"For many companies working in virtual assets, they are increasingly awarding perks in those assets, giving their employees some stake in their work. However, these are offered as 'perks' like stock options, alongside the main salary," Salat told Aletihad.
“This court case clarifies that if there is a clear agreement between two parties to pay extra perks in virtual assets, then they are enforceable under the law… This could open doors for employers in the industry who want to attract workers.”
In recent years, the UAE has introduced legislative measures to attract virtual asset traders and companies to the region. This includes dedicated regulatory authorities and free trading zones in Abu Dhabi and Dubai, leading to substantial growth in the sector. Some figures indicate a nearly 166% year-on-year increase in trading activity in the region, largely driven by the UAE.
Ste Cha, Head of Global Marketing at Feed Every Gorilla (FEG), a virtual asset company operating out of Dubai, expressed enthusiasm about the decision. Despite the currencies not being recognised as legal tender, he explained that by expanding the scope of virtual assets, the UAE is fostering the transparency and security required for a thriving industry.
“This creates a welcoming environment that will attract investment across various sectors, from finance to culture, sports, and hospitality. This is the diversification the UAE is aiming for as it transitions away from oil as its primary export, and crypto can be incorporated into every aspect of this economic evolution.”
FEG recently launched its SmartDefi programme, which aims to simplify the process of creating custom tokens. Cha says the platform seeks to expand the use of tokens by businesses, allowing them to create currencies that meet their specific financial needs.
“We created the standard truck; now you can add different features to make it into what you need, from a food truck to an ambulance,” he said.
While Cha believes virtual assets represent the future, he does not foresee them replacing the current system anytime soon. He acknowledges that while change is coming, the utility of virtual assets is increasingly being recognised.
“It will be challenging to uproot the existing infrastructure. There will be a necessary transitional period where workers and employers will need to be educated about the technology,” he said.