News Roundup — UAE Makes Crypto VAT-Free, Strengthening Hub Ambitions

Major news stories this week;

1. UAE Makes Crypto VAT-Free, Strengthening Hub Ambitions
2. Ripple Receives In-Principle Approval from the Dubai Financial Services Authority (DFSA)
3. Ohio Senator Introduces Bill to Allow Bitcoin, Crypto Payments for State Taxes
4. Coinbase to delist non-compliant stablecoins in EU following implementation of MiCA guidelines
5. Grayscale launches Aave Trust for accredited investors

Story Summaries;

1. The United Arab Emirates (UAE) made crypto transactions and conversions VAT-free with amendments to its Value-Added Tax (VAT) regulations. The UAE’s Federal Tax Authority (FTA) issued the VAT amendments on October 2, 2024. Tax consultancy firm PwC noted that the UAE defines cryptocurrencies as “representations of value that can be digitally traded or converted.” The auditing firm added that this category excludes financial securities and fiat currencies. The FTA encouraged crypto businesses in the country to review their retrospective VAT position under the new amendments and focus on input tax recovery. PwC indicated that virtual asset companies may need to submit voluntary disclosures to correct past VAT returns. UAE tax company Finanshels previously stated that registered businesses in the UAE can reclaim previously paid Value-Added Tax (VAT) through the Input Tax Recovery mechanism.
2. DFSA approval unlocks Ripple’s end-to-end payment services in the UAE, boosting Middle East operations. With DFSA Authorisation, Ripple is set to roll out its enterprise-grade digital asset infrastructure to a broader customer base in the UAE. This expansion is aligned with Ripple’s mission of providing businesses with faster, cost-effective and more efficient cross-border payment solutions, by combining robust regulatory compliance with ongoing investments in critical infrastructure components such as liquidity, best-in-class custody and on/off-ramps between fiat and digital assets. Ripple will be the first blockchain-enabled payment services provider to be licenced by the DFSA, the independent regulator of financial services conducted in or from the DIFC.
3. Ohio State Senator Niraj Antani proposed legislation to establish Ohio as one of the few states to accept crypto payments for state and local taxes.
   The proposed legislation requires all political subdivisions in Ohio to accept Bitcoin and other cryptocurrencies for payments, with the specific digital assets yet to be determined. The bill also seeks to permit state universities and pension funds to invest in the asset class. If enacted, it would mark a major expansion of the state’s engagement with crypto. Other U.S. states have explored similar ventures into crypto adoption. Colorado became the first state to officially accept Bitcoin for tax payments in 2022, allowing citizens to pay various taxes through PayPal, although refunds are given in U.S. dollars. Florida has also shown interest, with Governor Ron DeSantis pushing for businesses to pay state taxes in cryptocurrency in 2022. Utah, meanwhile, enacted H.B. 456, directing its government to accept cryptocurrency for tax payments beginning in 2023.
4. Crypto exchange Coinbase will delist non-compliant stablecoins in the European Union by the end of the year, the company said on Friday. "Given our commitment to compliance, we intend to restrict the provision of services to [European Economic Area] users in connection with stablecoins that do not meet the MiCA requirements by December 30, 2024," Coinbase said in an emailed statement. The European Union’s Markets in Crypto Assets guidelines are the most advanced set of regulations for the blockchain sector to date. Under the framework, stablecoin issuers must obtain e-money authorization in at least one EU member state and follow strict rules related to their backing treasury assets. Tether's USDT, the world's most valuable stablecoin, has not yet received an e-money license, unlike its closest rival Circle, the issuer of the USDC and EURC stablecoins, which became the first official Electronic Money Institution in the EU in July. Coinbase partnered with Circle to launch the USDC stablecoin, which is featured prominently on its exchange platform.
5. Grayscale Investments has announced the launch of the Grayscale Aave Trust – a new investment fund focused on AAVE, a cryptocurrency used in the Aave lending platform. This fund is available only to accredited investors, meaning it can only be accessed by individuals who meet certain income or wealth requirements. To be considered an accredited investor, a person must meet one of these requirements: they should make more than $200,000 a year on their own or $300,000 a year if they are married or have a partner. They must also have a net worth of over $1 million, not counting the value of their main home. Alternatively, they can qualify if they hold certain professional licenses, like Series 7, Series 65, or Series 82. For businesses or organizations, they need to have $5 million in easily accessible assets, or all the owners of the business must be accredited investors.

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And that’s all for last week’s news! Wishing you a great week ahead!