The Central Bank of UAE’s new rules for Stored Value Facilities (SVF) will facilitate the issuance of licenses to organizations that offer such service in the country, as per the regulator’s statement.
The SVFs are instruments through which users can keep their money digitally and use it for payment of goods and services like e-wallets on mobile phones or other wearable technology, top-up cards, smart cards and gift cards.
“The CBUAE aims to facilitate fintech firms and other non-bank payment service providers’ easier access to the UAE market while continuing to safeguard the customers’ funds, ensure proper business conduct and support the development of payment products and services,” it said earlier in a statement.
The initial regulatory framework for store value and electronic payment services came into action three years ago and in early November the central bank launched a set of new rules governing SVFs to enhance the digital payment system in the country.
This year, UAE witnessed a surge in the number of consumers relying on digital payments especially due to the outbreak of COVID-19 and health concerns related to it.
The new regulations formulated by CBUAE aims to offer a secured platform to market participants and promote competition and innovation in stored value and retail payment products and services by eliminating certain restrictions on licensing.
According to the new rules, non-banking payment services can procure a license without partnering with any licensed bank and making it a major shareholder. The regulation also has reduced the capital requirement to $4.08 million from $13.6 million and enables a digital customer on-boarding process instead of physical verification.
Some publications have falsely claimed that CBUAE has implicitly legalized cryptocurrencies in the region, however, the authority has cleared that currently, it is not accepting crypto or virtual assets as legal tender in the country and “the only legal tender in the region is the UAE dirham,” it added.
As defined in the regulation, “SVF is a facility that accepts a sum of money or money’s worth [that may, among others, include crypto assets or virtual assets] in exchange for the storage of the value of that money or money’s worth,” the bank said in a statement.
Since the central bank is not accepting crypto assets as legal tender in the region such assets will not be considered as a means of payment by regulators and can only be used for investment with a high risk.
Currently CBUAE is working on the Retail Payment Services Regulation, which will define regulations regarding cryptocurrency assets. The rules will bring the concept of payment tokens, which are defined as crypto-assets backed by a fiat currency.