Dubai Court Approves Cryptocurrency as a Valid Form of Salary

In a landmark decision, the Dubai Court of First Instance has officially recognized the payment of salaries in cryptocurrency as valid under employment contracts. This ruling marks a significant shift in the United Arab Emirates (UAE) approach to digital currencies, indicating a broader acceptance of crypto in the region’s legal and economic frameworks.

A Landmark Ruling Reflects UAE’s Evolving Legal Landscape

This case, identified as number 1739 of 2024, involved an employee who sued their employer for unpaid wages, wrongful termination compensation, and other benefits. The employment contract specified a monthly salary partly in fiat currency and 5,250 EcoWatt tokens, a form of cryptocurrency. The dispute arose when the employer failed to pay the token portion of the salary for six consecutive months.

Irina Heaver, a partner at UAE law firm NeosLegal, highlighted that this ruling is a significant departure from the court’s stance in 2023. At that time, a similar case was denied because the employee couldn’t provide a clear method for valuing the cryptocurrency in fiat terms. However, in 2024, the court ruled in favour of the employee, ordering the employer to fulfil the crypto salary payment as stipulated in the contract, without converting it into fiat currency.

Court Recognizes Cryptocurrency in Employment Contracts

Heaver emphasized that this decision underscores the UAE’s progressive approach to digital currencies, reflecting an increasing willingness to integrate cryptocurrency into everyday financial transactions. The court’s ruling indicates a recognition of the evolving nature of Web3 financial systems and a step toward greater acceptance of cryptocurrency within the UAE’s legal structure.

The court’s reliance on UAE Civil Transactions Law and Federal Decree-Law No. 33 of 2021 in making its decision demonstrates a consistent application of legal principles, even as new financial technologies emerge. This ruling not only reinforces the legal validity of cryptocurrency payments but also signals to employers and employees alike that such terms in employment contracts will be upheld by the courts.

Implications for Crypto Adoption in the UAE

The implications of this ruling are far-reaching. It sets a positive precedent that could encourage more companies in the UAE to consider integrating digital currencies into their financial practices. For employees, this ruling is a significant victory, ensuring that their right to agreed-upon compensation—whether in fiat or cryptocurrency—is protected under UAE law.

Heaver pointed out that this ruling is a critical step in the UAE’s journey toward becoming a leader in the digital economy. It sends a clear message that the country is open to innovative financial practices and is prepared to adapt its legal frameworks to accommodate the growing role of cryptocurrency in global finance.

Also Read: Dubai Regulator Introduces New Guidelines for Crypto Token Funds