Enhancing corporate finance through ICOs.. “UAE” as a model
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Answer Enhancing corporate finance through ICOs.. “UAE” as a model
The UAE is moving forward with its plans to offer initial cash offerings (ICOs) as a way to raise funds for start-up companies and institutions in the coming year (2019).
In an effort to boost financing in the capital markets, it will enable local companies in the “UAE” to raise financing by offering cryptocurrency tokens to investors along with other traditional means such as: shares issued in an initial public offering (IPO), As reported by Reuters news agency.
- The difference between an Initial Coin Offering (ICO) and an Initial Public Offering (IPO)
Specifically, “securities” ICOs will be approved by authorities under the new regulations, a draft of those regulations is currently being worked out, and expected to be implemented as early as 2019.Read:Elon Musk comments on what happened to FTX and its CEO
Omar Saif Al Zaabi, Chairman of the UAE Stock Exchange Supervisory Authority, said: In a seminar:
“The Board of Directors of the UAE Securities and Commodities Authority has agreed to consider ICOs as securities. According to the company’s plan, we should have effective regulations for this in the first half of 2019.”
The UAE Securities Market Supervisory Authority is currently drafting regulations for ICO projects with deliberate, unnamed advisors. The official added that the supervisory authority is working remarkably alongside the “Dubai” and “Abu Dhabi” markets to develop environmentally friendly trading platforms to support civil society organizations.
Nearly a year ago, Abu Dhabi – the largest emirate in the United Arab Emirates – issued guidelines on cryptocurrency and ICO projects, regulating the latter as “securities”. Cryptocurrencies, although not classified as legal tender, are considered commodities by the Abu Dhabi government.
The report notes that a combination of low oil prices and operating stock markets over several years has led to a “severe erosion of initial public offerings”, which has dealt a heavy blow to local companies looking to raise financing in the UAE and the Gulf region as a whole.Read:India’s Bharatiya Janta Party (BJP) accused of stealing up to $12 billion in Bitcoin
The authorities are taking serious measures to verify the implementation of this order, with a new law that enables family-owned companies to sell the majority of their shares and even 100% of their companies through “initial public offerings.”
It is worth noting that if the UAE Prime Minister approves, the new law will become effective at the beginning of 2019. Moreover, the supervisory authority is also considering appointing 20% of women as members of the boards of directors of public companies as a step towards achieving equality in addition to encouraging female investors.
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