The following recent court decision in the UAE could be considered as an effort to write off cryptocurrency into employment contracts. However, although this decision allows such things as EcoWatt tokens to be awarded as part of an employee’s compensation package, responding to the prohibition for companies to pay their staff in full using cryptocurrencies, it remains unlawful.
In another ruling, which required an employer to honour an employment promise of making payment in digital tokens to an employee, the UAE courts sign the ambivalent attitude of the UAE to cryptocurrencies when it comes to its operational legal financial systems. Nevertheless, the UAE Wage Protection System (WPS) holds the condition that all compensation must be in dirhams (AED); as a result, digital currencies’ utilization in daily pay roll is restrained.
Anna Zeitlin, a partner in Fintech and Financial Services at Addleshaw Goddard, pointed out that this ruling is limited to employment benefits as opposed to, say, wages. She pointed out that though, according to Federal Decree-Law No. (33) of 2021 there is an allowance for salaries to be paid in any currency other than AED provided both the parties agreed, the WPS would have to be amended for the use of cryptocurrencies to be feasible.
The various discussions have ensued as people ponder over other possibilities of applying cryptocurrency in organizations other than paying salaries to employees; professionals have thought of its application especially in such realms of the economy as real estate and retail. Stablecoins could offer a way to minimize the risks arising from turbulence in cryptocurrencies or CBDCs might be viable solutions mentioned by Zeitlin.
Regarding the future, Zeitlin remained optimistic that this case could form the basis for further modifications to the WPS and thus enable cryptocurrencies to be recognised as acceptable means of payment for salaries. Furthermore, she noted that through the use of block-chain; real estate transaction in UAE can greatly be transformer in terms of processing time and market availability.
As the UAE is actively striving to become one of the leaders in the legalization of cryptocurrencies this decision can be considered as one of the steps to include cryptocurrency into the economic system of the country.
