Digital Assets in the UAE: Evolving Legal Frameworks

Questions surrounding the recovery and protection of digital assets have become increasingly pressing. As digital assets can be transferred instantly and often anonymously across borders, the UAE’s courts and legislators are now adapting to ensure that the legal system remains robust, responsive, and aligned with international best practice.

Legal status of digital assets in the UAE

A key question that is being debated internationally is whether cryptocurrencies are “property” in law, since most recovery remedies (like freezing orders) apply to property rights. Within the UAE’s legal system, this issue is also being settled.

Free zones (DIFC/ADGM)

The DIFC (a common-law free zone) took a landmark step in March 2024 by enacting Digital Assets Law No. 2 of 2024 (Digital Assets Law). Section 8 defines a “digital asset” as a notional unit created by software and network data that exists independently of any person or legal system, cannot be duplicated, and whose one-person use necessarily prevents another’s use.

 This statutory definition was purpose-built to include cryptocurrencies, non-fungible tokens and other blockchain tokens. Shortly after, the DIFC Court of Appeal delivered its first full judgment on crypto in Huobi v Tabarak (June 2024). The court “definitively confirmed” that digital assets (in that case, Bitcoin) are legal property under DIFC law. It held that Bitcoin is a form of intangible personal property, a “third class of property” neither a thing in possession nor in action, and analyzed how title passes by exclusive control of private keys rather than physical possession.

In doing so, the DIFC case aligned with the statutory law: Article 9 of the new DIFC law expressly states a digital asset “is intangible property and is neither a thing in possession nor a thing in action”

Onshore

Even outside the free zones, UAE courts have begun recognizing crypto as property. In a recent Dubai Court of First Instance ruling (Case No. 1872/2024), the court ordered a scheme promoter to return specific cryptocurrency (29 Bitcoins and 102 Ethereum) to the investor, or pay their cash equivalent at current market rates.

The judge treated the coins as recoverable property under civil law and permitted “in-kind” enforcement (return of the actual assets) or, alternatively, fiat compensation based on market value.

This landmark judgment confirms that Dubai courts will enforce crypto obligations like any other property and illustrates practical recognition of digital assets in onshore proceedings.

Recovery remedies for digital assets

Once crypto is treated as property, powerful common-law remedies become available. In particular, freezing injunctions (including Worldwide Freezing Orders, WFOs) are indispensable. These court orders restrain defendants (and sometimes third parties) from transferring or disposing of assets pending judgment.

Originally developed in English law, freezing orders are now available in most common-law jurisdictions, including the DIFC and ADGM in the UAE. They have been used to lock down everything from bank accounts to cryptocurrency wallets.

Because crypto can “move at the speed of light,” courts have not hesitated to apply freezing relief to digital assets. For example, the Dubai court in the Bitcoin/Ethereum case explicitly froze the coins and compelled their return (or equivalent payment).

Freezing injunctions work similarly to traditional asset freezes: they include a penal notice warning (usually on the order) that non-compliance may incur contempt sanctions. This threat of criminal penalties or fines often persuades recipients to comply voluntarily. In practice, many cryptocurrency exchanges and banks will comply if they see a valid court order.

Enforcement

The courts have also been innovative about how to enforce these injunctions in the crypto context. Two recent developments are worth noting:

• “Persons Unknown” and crypto: Courts now routinely allow WFOs naming unknown or pseudonymous fraudsters as defendants (“Persons Unknown”), reflecting that crypto fraudsters are often anonymous and quick to move assets. This avoids the need to identify each perpetrator before getting relief.
• Blockchain-based service of process: With defendants hiding behind wallet addresses, courts have even sanctioned novel methods of serving orders. In the UK Osborne v Persons Unknown (2023), for example, the High Court recognized stolen NFTs as property and permitted serving the freezing order by airdropping an NFT directly into the defendants’ wallets. Similarly, Hong Kong courts have “tokenized” injunction orders, embedding them on-chain with a digital “notice” tied to the suspect wallets, so that the freeze is publicly visible whenever anyone interacts with those addresses

In short, once the property status of crypto is clear, the UAE’s common-law courts are willing to use every tool at their disposal, from traditional freezing orders to cutting-edge blockchain notices, to safeguard victims’ assets.

Cross-border enforcement challenges

Despite these remedies, enforcing orders across jurisdictions can be tricky. A WFO is not magically “self-executing” worldwide. Its name notwithstanding, an English or DIFC freezing order requires local enforcement or voluntary compliance in each territory.

• Limited automatic effect: Under UAE law, foreign judgments or orders are not automatically binding unless recognized by a UAE court. Thus, an English or DIFC WFO cannot simply be enforced in, say, an onshore UAE bank account without local proceedings. Even DIFC courts’ orders have no jurisdiction over onshore institutions or other free zones unless those parties consent. In practice, claimants often rely on the penal notice on the WFO to convince local banks to freeze assets, but banks may legally decline if not under the issuing court’s jurisdiction.
• Penal notice effects: The penal notice (typically at the top of a WFO) warns of contempt sanctions for non-compliance. This notice, and the risk of fines or jail, can motivate defendants or third parties to honor the freeze out of caution or reputation concerns. However, unwilling parties may still ignore the order unless it is locally enforceable.
• Local enforcement routes: Because of this, victims often must register the judgment or reapply for relief in the country/jurisdiction where the assets reside. In the free-zone context, if a DIFC WFO was obtained against a DMCC (Dubai) company, the claimant would likely need to initiate separate enforcement proceedings onshore in Dubai’s courts.

Conclusion

As digital asset use continues to grow, UAE businesses must plan proactively to protect them. Key takeaways include:

• Treating crypto as property: This allows courts to apply powerful property-based remedies (freezing orders, tracing);
• Acting quickly: Seizure or laundering of crypto can occur instantly, so emergency relief like a freezing injunction can be decisive;
• Considering jurisdiction carefully: Free zones like the DIFC/ADGM offer common-law tools, but onshore UAE courts are also asserting power over crypto disputes;
• Coordinating enforcement globally: A single WFO may not lock down assets everywhere. Plan parallel actions, and use mechanisms like serving by blockchain when needed.

All in all, recovering digital assets in the UAE demands a sophisticated, multi-pronged strategy. As analysts note, “in a fast-moving and borderless digital environment, a coordinated legal strategy is key to protecting assets that can be easily and quickly dissipated.”

With the law rapidly evolving on this front, staying ahead of new remedies and regulatory developments is essential for any business dealing in crypto.