Recently, Dumon Partners returned to the situation with NFTs and digital assets such as cryptocurrency in the Middle East. In a long post, the law firm made a statement of the local artistic scene and did not fail to mention the laws in force in the region. Zoom!
Middle East, a thriving art scene
The Middle East, and more specifically the United Arab Emirates, is currently home to a thriving art scene. Many observers confirm this situation. Art Dubai, Brjeel Art Foundation, Alsrkal Avenue and a host of actors are contributing to the revitalization of this sector. The arrival of international galleries like Galleria Continua, Perrotin Art Gallery is seen as a catalyst in this system.
In addition, Dubai is showing a very strong resurgence of regional and international creators and buyers, to the point of elevating it to the rank of crypto and NFT hubs. In a short time, the city will become the world leader in digital art.
Its geographical location, located between East and West, also hosts things for fans of physical and digital art. This was substantiated by Christie’s first auction in 2006 and continues to this day. Didn’t Art Dubai open a digital pavilion promoting digital media and NFTs in March last year?
The challenges of NFT art in the Middle East
As you know, non-fungible tokens (NFTs) are unique, encrypted, blockchain-based digital assets. In general, they can be embossed, bought and sold in a variety marketplaces such as Rarible, Coinbase, Binance and OpenSea.
NFT art, an extension of NFT?
The strength of NFTs lies in their unique character, i.e. the impossibility of replacing them with another asset of equal value. The icing on the cake, NFTs differ from physical artworks in that they award a digital authentication certificate. Since the latter can be backed up by a physical or digital asset and benefit from a high inventory level, it is not easy to replace them with anything.
The list of benefits does not end there. For example, there is the fact that NFT and NFT art can represent any asset, whether it is virtual or physical. Such is the case with Andrès Reisigner, an Argentine artist who traded NFT furniture for cryptocurrencies worth a total of $ 450,000. Note that his collection phygital (physical + digital) was presented in Dubai in March. Middle Eastern art lovers enjoyed it to their heart’s content.
NFT art and its legal boundaries
To all this comes the proliferation of creators of original works, who accrue royalties from the sale of their creations. Technology of smart contract help, NFT art writers find themselves at an advantage. The only problem is the existence of certain legal obstacles, which bring us back to the need to establish a legal framework and appropriate provisions. Have we not recently experienced a problematic situation related to intellectual property (IP) during a mint and an NFT art sale by Mason Rothschild?
As a reminder, the artist has launched a collection of 100 NFTs ” MetaBirkin NFT with illustrations of the mythical Birkin bag from Hermès. This digital property sold for $ 42,000 per. piece, was the subject of a claim by Hermès for trademark infringement. Of course, the artist is on trial, and we await the rest of the trial.
Thus focused on NFT art and its legal issues, Dumon Partners has tackled the legal environmentcrypto business in the United Arab Emirates.
NFT Art and Cryptocurrencies, UAE Jurisdiction Status
The cities of Abu Dhabi and Dubai are relatively advanced in terms of regulating the universe of NFT art and cryptocurrencies.
Abu Dhabi and ADGM
Abu Dhabi, through Abu Dhabi Global Market (ADGM), has created a financial free zone to facilitate the regulation of cryptocurrencies. Its consultation document called ” Suggestions for improving capital markets and virtual assets in ADGM testify to this desire. Through this document, the institution recognizes that NFTs constitute intellectual property rights and not “specified investments or financial instruments“.
It also states that “virtual assets»Cryptocurrencies, digital assets, fiat coins and derivatives / funds. Therefore, it is necessary to leave their management to virtual asset depots and multilateral trading systems.
Dubai and DMCC
At the same time there is in DubaiDubai Multi Commodities Center(DMCC), which proposes a comprehensive legal framework for NFT art and cryptocurrencies. He currently proposes 4 types of licenses for entrepreneurs working in the metaverse, NFT, cryptocurrency and derivatives sectors. With such proof in hand, the latter will have the opportunity to operate infree zoneby the DMCC. The fact that the latter uses a structured regulatory framework that promotes transparency and ease of doing business makes life easy for local actors.
And finally, it is worth mentioning the birth of the Virtual Assets Regulatory Authority (VARA) in Dubai in March last year. Its mission is to issue licenses and establish rules regarding Act No. 4 of 2022. This Digital Assets Act is primarily intended to regulate virtual assets in the Emirate of Dubai. The only entity not affected by it: the International Financial Center, which has its own regulatory framework for investment tokens.
Dubai, NFT Art and Digital Assets Act
The birth of VARA and the law on digital assets are not inseparable. This law definesdigital tokens” like a “digital representation of a set of rights that can be offered and traded digitally through a virtual asset platform“.
A question arises: will NFTs easily fall within the scope of this Digital Assets Act?
At present, VARA prohibits any involvement in specific assets related to digital assets without their permission. Is worried :
- operation and management of a virtual asset platform;
- provision of exchange services between fiat and digital assets;
- provision of digital asset transfer services;
- provision of custody, administration and / or control services for digital assets;
- digital asset portfolio services; and
- digital token trading services.
The said law obliges all Dubai companies that have a legal form to comply with the directives of the authorities baptized by the Government of Dubai. This is to protect the interests of investors.
To conclude, we would say that the United Arab Emirates (UAE) is aware of the developments in the cryptocurrency sector and NFT art. Providing clear and accurate information as well as clear and thorough rules is one of its current priorities. Seemingly restrictive, these initiatives fully respond to a desire to include players from the blockchain, crypto and NFT sectors operating in the region.
Source: CCI France UAE
Get an overview of news in the world of cryptocurrencies by subscribing to our new daily and weekly newsletter service, so you do not miss any of the essential Cointribune!
The blockchain and crypto revolution is underway! And the day when the effects will be felt on the most vulnerable economy in this world, against all hope, I would say I had something to do with it.