The United Arab Emirates is the world’s sixth-largest oil producer and one of many richest international locations on the earth, with a gross home product per capita of above $43,000 as of 2019, in accordance with the World Financial institution. As per its “Imaginative and prescient 2021,” Iis petroleum- and natural-gas-reliant financial system is committed to sustainable development with the intention to emerge because the Gulf Cooperation Council’s, or GCC’s, most diversified financial system. This contains the digitization of the financial system, which has turn out to be a precedence through the COVID-19 pandemic.
A inexperienced financial system for sustainable digitization
The primary digital Abu Dhabi Sustainability Week Summit 2021 was broadcast reside world wide in English and Arabic on YouTube, receiving over 100,000 views through the occasion from contributors hailing from over 175 international locations, and it featured over 500 influential international leaders from authorities, enterprise and know-how who explored the social, financial and technological alternatives supporting a sustainable inexperienced restoration from the pandemic.
On the summit, GCC leaders reconfirmed their decarbonization pledges “to avoid wasting the equal of 354 million barrels of oil via the deployment” of renewable energies. This represents a 23% discount in oil consumption to cut back the facility sector’s carbon dioxide emissions by 22%, in accordance with the most recent figures from the Worldwide Renewable Vitality Affiliation.
In his opening handle, Sultan Ahmed Al Jaber — the UAE’s minister of business and superior know-how, particular envoy for local weather change, and chairman of unpolluted vitality firm Masdar — pointed out that with the COVID-19 pandemic, society is now witnessing the implementation of synthetic intelligence, machine studying and the digitization of various spheres of life all around the world. Accordingly, electrification, decarbonization and digitization initiatives have turn out to be more and more essential throughout all industries.
Masdar’s photo voltaic vitality initiatives
New digital applied sciences require a excessive consumption of electrical energy, which within the UAE is presently produced predominantly utilizing fossil fuels that adversely influence the setting. Given the UAE’s huge hydrocarbon assets, Masdar is aiming to turn out to be a serious blue hydrogen producer and contribute to the nation’s efforts to cut polluting carbon emissions by almost 1 / 4. Masdar just lately reached an settlement with Abu Dhabi’s Division of Vitality and 5 extra establishments to develop clear hydrogen gasoline options.
However the UAE’s Paris Settlement dedication to zero emissions by 2050 is closely reliant on photo voltaic vitality to diversify Abu Dhabi’s vitality sector into renewable sources. Photo voltaic vitality is seen as an anchor to Masdar’s renewable methods from many views. In Abu Dhabi, it’s building the world’s largest solar energy plant, as deserts are a number of the finest locations to reap solar energy. They’re by no means in need of daylight and are wealthy in silicon — the uncooked materials for the semiconductors from which photo voltaic cells are made. One other profit to putting in photo voltaic panels within the desert, in accordance with a 2018 examine, is that it could create a extra humid setting that causes vegetation to unfold to fight desertification.
Masdar Metropolis: The UAE’s aerospace and inexperienced know-how zone
Developed by Masdar, Abu Dhabi’s Masdar Metropolis is among the world’s most sustainable city communities, providing a strategic base via which corporations can construct their networks domestically and globally and might discover a number of funding alternatives and check revolutionary new applied sciences from inception via to implementation to assist the UAE diversify its financial system.
Housing a free zone space, town has greater than 900 organizations, from worldwide conglomerates to startups, creating revolutionary applied sciences within the areas of vitality, water effectivity, mobility, area, blockchain know-how and synthetic intelligence to handle the world’s most crucial sustainability challenges in additional than 30 international locations.
UAE House Company
Based mostly in Masdar Metropolis, the UAE House Company contributes to supporting a sustainable nationwide financial system by creating satellites utilized in pure useful resource mapping, environmental monitoring, land-use planning and safety, and it has additionally launched a probe to Mars.
Digital financial system
The UAE authorities has made the digitization of its financial system a precedence with the intention to deliver effectivity to authorities, creativity to business, and construct worldwide management. To perform this objective, the UAE has established in Masdar Metropolis the world’s first graduate-level, research-based synthetic intelligence college, Mohamed bin Zayed College of Synthetic Intelligence, which welcomed its first college students in January 2021.
The UAE additionally adopted the Emirates Blockchain Strategy 2021 and The Dubai Blockchain Strategy, which have undertaken a number of blockchain tasks. SustVest is a crowd-investing blockchain-based platform that lets folks put money into photo voltaic tasks and earn returns from customers who use their funding to put in photo voltaic panels. The corporate is predicated within the Dubai Silicon Oasis Authority and has constructed its answer on the Nem blockchain. Its founder, Hardik Bhatia, defined:
“The worldwide rooftop photo voltaic section is booming with alternatives, and is valued at over $66 billion. Rising economies wish to transition to photo voltaic because it presents a inexperienced and low-cost various to traditional vitality sources. SustVest allows this transition in rising economies by crowdfunding rooftop photo voltaic tasks in rising economies on its platform. We tokenize photo voltaic tasks granular to the extent of particular person photo voltaic cells, and traders buying these tokens can earn dividends generated by the sale of electrical energy from these particular person photo voltaic cells. We’re opening the gates for retail funding into photo voltaic area, and we achieve this by tokenizing the tasks to cut back the barrier of entry and making a secondary market for offering liquidity to traders.”
The Central Financial institution of the United Arab Emirates, together with the Saudi Central Financial institution, is creating a state-backed bilateral central bank digital currency, “Aber.” Aber is initially set to help the UAE and Saudi Arabia make less expensive bank-to-bank, cross-border funds and monetary settlements utilizing blockchain know-how on a probationary foundation, and in accordance with official statements, it will likely be completely accessible to a restricted variety of banks. Finally, Aber will probably be used globally on China’s blockchain-based service community, or BSN, which can assist future CBDCs from numerous international locations such because the UAE.
Crypto-asset rules within the UAE
The UAE prioritizes blockchain and distributed ledger know-how and has launched numerous associated ventures, particularly for the reason that COVID-19 pandemic. Nonetheless, cryptocurrency regulation within the nation remains restricted.
Towards the tip of 2020, the UAE’s Securities and Commodities Authority, or SCA, published “The Authority’s Chairman of the Board of Administrators Choice No. (21/R.M) of 2020 In regards to the Regulation of Crypto Belongings.” The SCA’s resolution lays out its licensing regime for anybody who needs to supply crypto belongings throughout the UAE, together with exchanges, crowdfunding platforms, preliminary coin choices, custodians, and different companies that use crypto belongings.
The Monetary Providers Regulatory Authority, or FSRA, of the Abu Dhabi International Market considers crypto belongings to have traits like these of shares, that means they’re to be handled as securities and are topic to data disclosure necessities associated to threat and transactions. However, utility tokens and non-fiat cryptocurrencies are thought-about commodities and should not topic to market rules. Regulation No. 20 of 2018 on Anti-Cash Laundering defines laundered funds to be belongings in no matter kind, together with digital currencies. Article 3 of Regulation No. 8 of 2017 on value-added tax imposes a 5% tax on imported and exported commodities. This tax could apply to utility tokens and non-fiat cryptocurrencies, because the FSRA considers them to be commodities.
The UAE does not have a signed tax treaty settlement with the US. Nonetheless, in accordance with the Conduct of Enterprise Rulebook, crypto-asset companies are obligated to declare worldwide revenue for tax functions in accordance with the requirements of the intergovernmental Overseas Account Tax Compliance Act settlement between the UAE and the US.
A inexperienced restoration is an absolute crucial for a sustainable social and financial future within the post-pandemic world, as pointed out by Alok Sharma, president of the twenty sixth United Nations Local weather Change Convention of the Events — higher generally known as COP26 — who praised Masdar’s undertakings in creating inexperienced vitality applied sciences.
Discovering financing for this inexperienced transition will probably not be too difficult, according to Khaldoon Khalifa Al Mubarak, managing director and group CEO of Mubadala Funding Company. As a result of a tectonic paradigm shift has occurred for the reason that COVID-19 pandemic, with the markets pricing local weather threat into the worth of securities, there’s a elementary reallocation of capital towards sustainable investing to make sure a inexperienced restoration in a post-COVID-19 world. As Laurence Fink, chairman and CEO of BlackRock — the world’s largest asset supervisor — pointed out:
“I consider that the pandemic has offered such an existential disaster — such a stark reminder of our fragility — that it has pushed us to confront the worldwide risk of local weather change extra forcefully and to think about how, just like the pandemic, it’s going to alter our lives. It has reminded us how the largest crises, whether or not medical or environmental, demand a world and bold response.”
The views, ideas and opinions expressed listed here are the creator’s alone and don’t essentially mirror or symbolize the views and opinions of Cointelegraph.
Selva Ozelli, Esq., CPA, is a world tax lawyer and licensed public accountant who regularly writes about tax, authorized and accounting points for Tax Notes, Bloomberg BNA, different publications and the OECD.