Part 3
Article 2: Prohibitions on Activities and Promotions
Restrictions on activities
1.
No Person shall perform any Payment Token Service within the UAE or directed to Persons in the UAE, unless such Person is Licensed or Registered by the Central Bank to perform such Payment Token Service.
2.
No Person shall perform any service, within the UAE or directed to Persons in the UAE, where that service:
a)
is performed with respect to any Means of Payment that is not a Payment Token; and
b)
is a service that is similar or equivalent to a Payment Token Service.
This prohibition shall apply to all Persons, including any Person acting in the course of performing Virtual Asset activities for which it is licensed or regulated by SCA or a Local Licensing Authority.
3.
No Person shall, within the UAE or directed to Persons in the UAE, issue Algorithmic Stablecoins or Privacy Tokens or perform services relating to Algorithmic Stablecoins or Privacy Tokens. This prohibition shall apply to all Persons, including any Person acting in the course of performing Virtual Asset activities for which it is licensed or regulated by SCA or a Local Licensing Authority.
4.
A Licensee or Registree must not knowingly initiate, facilitate, effect or direct a Payment Token Transfer as part of its Payment Token Service unless the transfer is of a:
a)
Dirham Payment Token issued by a Licensed Payment Token Issuer being used for any lawful purpose; or
b)
Foreign Payment Token issued by a Registered Foreign Payment Token Issuer being lawfully used (or sold for use) as a Means of Payment for purchase of Virtual Assets or derivatives of Virtual Assets.
5.
A Foreign Payment Token Registree may only initiate, facilitate, effect or direct a Payment Token Transfer as part of its Payment Token Service in the UAE if the transfer is of a Foreign Payment Token being used (or sold for use) as a Means of Payment for purchase of Virtual Assets or derivatives of Virtual Assets.
6.
A Licensed Payment Token Issuer may only issue Dirham Payment Tokens to Persons resident in the UAE. For the avoidance of doubt, aside from this Article (2)6 there shall be no restriction under this Regulation as to the territory in which a Payment Token may be used or to or from which it may be transferred.
7.
No Merchant or other Person in the UAE selling goods or services during the course of business may accept a Virtual Asset towards payment for that sale unless that Virtual Asset is:
a)
a Dirham Payment Token issued by a Licensed Payment Token Issuer being used as a Means of Payment ; or
b)
a Foreign Payment Token issued by a Registered Foreign Payment Token Issuer being used as a Means of Payment for purchase of a Virtual Asset or Virtual Asset derivative.
8.
A Bank may not act as a Payment Token Issuer, but may, subject to the licensing and other requirements of this regulation, set up a subsidiary, affiliate or other related entity to perform this activity.
Restrictions on promotions
9.
No Person shall engage in any Promotion, within the UAE or directed to Persons in the UAE, where such Promotion relates to Payment Token Services unless such Person:
a)
has a License or Registration to perform the activities which are the subject matter of the Promotion; or
b)
is appointed by such a Licensee to engage in the Promotion on the Licensee’s behalf.
10.
No Person shall engage in any Promotion, within the UAE or directed to Persons in the UAE, where such Promotion is for services relating to any Means of Payment unless the Promotion solely relates to:
a)
Dirham Payment Tokens issued by Licensed Payment Token Issuers being used for any lawful purpose; or
b)
Foreign Payment Tokens issued by Registered Foreign Payment Token Issuers being lawfully used as a Means of Payment for purchase of a Virtual Asset or Virtual Asset derivative.
This prohibition shall apply to all Persons, including any Person engaging in Promotions relating to Virtual Asset activities for which it is licensed or regulated by SCA or a Local Licensing Authority.
11.
No Person shall engage in a Promotion, within the UAE or directed to Persons in the UAE, where such Promotion is for the issuance of Algorithmic Stablecoins or Privacy Tokens or services relating to Algorithmic Stablecoins or Privacy Tokens. This prohibition shall apply to all Persons, including any Person engaging in Promotions relating to Virtual Asset activities for which it is licensed or regulated by SCA or a Local Licensing Authority.
12.
The Central Bank may require any Person to provide a reasonable level of evidence to demonstrate that such Person is not performing an activity in breach of this Article (2). The Central Bank may request such evidence on a single occasion or may require regular reporting (in such form as the Central Bank may specify from time to time) of such evidence by any Person.
13.
For the avoidance of doubt, reference to ‘the UAE’ in this Article (2) excludes the jurisdiction of the Financial Free Zones.
Article (3): Designation of Means of Payment
1.
The Central Bank may designate a type of Virtual Asset as constituting a Means of Payment.
2.
The Central Bank may require any Person which, within the UAE or directed at Persons in the UAE, issues Virtual Assets or performs services relating to Virtual Assets, to provide the Central Bank with such information as the Central Bank requires in order to determine whether to designate the Virtual Asset as a Means of Payment.
3.
For the avoidance of doubt, reference to ‘the UAE’ in this Article (2) excludes the jurisdiction of the Financial Free Zones.
Article (4): Exemptions
1.
Payment Token Services limited to the following types of Payment Tokens and posing a low level of risk to Customers and the financial system are exempt from this Regulation:
a)
Payment Tokens used for certain reward schemes. Such Payment Tokens may only be:
(i)
issued in return for a sum of money paid by (A) the Payment Token Issuer; or (B) a Merchant under an agreement with the Payment Token Issuer; and
(ii)
used for making payments for goods or services provided by the Payment Token Issuer or Merchant under specific terms and conditions of the Payment Token Service.
Examples may include loyalty schemes provided by shops and supermarkets that offer Payment Token rewards for customer loyalty;
b)
Payment Tokens used for certain bonus point schemes:
(i)
Such Payment Tokens may be used as points or units (by whatever name called) provided by (A) the Payment Token Issuer; or (B) a Merchant who agrees to provide goods or services to the Customer under an agreement with the Payment Token Issuer.
(ii)
The Customer may only use the Payment Token for making payments for goods or services provided by the Payment Token Issuer or a Merchant.
Examples are airline mileage programmes and customer loyalty schemes that provide Payment Tokens to customers to reward their patronage, and whereby such Payment Tokens are not redeemable for cash;
c)
Payment Tokens that can only be used as a Means of Payments for non-financial goods or services provided by the Payment Token Issuer; or
d)
Payment Tokens falling within Article (4)2.
2.
The Central Bank may exempt a Payment Token Issuer from licensing and other requirements under this Regulation with respect to its Payment Tokens, and specify the conditions for such exemption, where:
a)
if the Payment Token Issuer had to hold a Reserve of Assets in accordance with Article (22), the aggregate amount of the Reserve of Assets would not exceed half a million Dirham (500,000 AED) or its equivalent; and
b)
the aggregate number of Tokenholders is not more than 100.
3.
The Central Bank may determine that a Payment Token Service is not exempt or is no longer exempt and require the Person performing the service to apply for a License.