- The Dubai Court of First Instance ruled that salary payments in cryptocurrency are valid under employment contracts.
- The court’s decision reflects a shift toward accepting digital currencies in the UAE’s legal systems.
The Dubai Court of First Instance has acknowledged the legality of salary payments made in cryptocurrency, marking a significant shift in the United Arab Emirates’ (UAE) approach to digital currencies. This ruling underscores the court’s evolving stance on integrating cryptocurrencies into the nation’s legal and economic frameworks.
According to Irina Heaver, a partner at UAE law firm NeosLegal, the decision made in case number 1739 of 2024 is indicative of the change of approach. It contrasts with the previous year’s judgment, in which a similar claim was rejected owing to the lack of discernible methodology for valuing the cryptocurrency at the center of the case. This earlier decision indicated that the authorities had been rather conservative in approaching non-bank payment methods, insisting on concrete data.
Decision Opens Door for Digital Currencies in UAE Economy
However, in 2024, the court ruled in favor of an employee who had filed a lawsuit over unpaid wages, wrongful termination compensation, and other benefits. The employment contract in question provided for payment in the form of fiat money and 5,250 EcoWatt tokens per month. The conflict began when the employer neglected to provide the employee with a token salary for six months.
This time, the court recognized the validity of the cryptocurrency payment without requiring its conversion into fiat currency, reflecting a broader acceptance of digital currencies in employment contracts.
The decision made by the court can have potentially significant consequences for the UAE’s digital economy, especially in the Web3 sector. The court has, therefore, paved the way for other industries to embrace digital currencies by legalizing crypto payments in employment contracts. This could lead to the enhancement of the uptake of cryptocurrencies across the economy and, therefore, deepen the integration of digital assets in the UAE economy.
Ruling Aligns UAE with Global Trends in Crypto Adoption
The ruling also brings the UAE in line with other regions, such as New Zealand, that have already adopted cryptocurrency as a means of paying salaries. Such acceptance of digital assets in employment contracts may lead to the increased adoption of cryptocurrencies globally and redefine conventional financial systems.
This, however, is not a limitation to the UAE, as other legal and economic systems have also embraced cryptocurrency. Digital assets are being applied in different fields across the world, and their usage is still increasing. For instance, the availability of Bitcoin and Ethereum ETFs has expanded the list of cryptocurrencies of interest beyond BTC and ETH.
In May 2024, the former director of Bitmain and his team presented the FinTax, a software aimed at facilitating the tax declaration of the crypto assets. This unique service is designed to help simplify crypto tax calculations especially for traders and workers in areas where digital currencies are accepted as a mode of payment. This is evidence of the increasing adoption of digital assets into the financial system.
