Knowledge Hub



    - JULY 2020


    DIGITAL IDENTITY AND OPEN BANKING Open banking by concept drives a costumer centric approach to give the consumer an increased choice of how she wants to consume financial products and services. Open Banking has also been a major driver in the rebalancing of a digitally-enabled economy, seeking to provide better outcomes for customers and appropriately manage the risk of a new digital ecosystem. In addition, an increasingly customer-centric regulatory response in EU is creating a precedent that is compelling institutions to leverage new technologies and give customers more control of their data and identity in the digital economy.


    - JUNE 2020


    UNDERSTANDING THE DYNAMICS OF FUNDS IN UAE Financial markets play a vital role in the economic development of a country. They facilitate the allocation of scarce resources by transferring them from savers to borrowers, thereby accelerating investment activities in the economy. Financial markets play a vital role in the economic development of a country. They facilitate the allocation of scarce resources by transferring them from savers to borrowers, thereby accelerating investment activities in the economy. A key aspect in the financial market is incorporation of funds. Individuals, businesses, and governments all use funds to set aside money. Individuals might establish an emergency fund or rainy-day fund to pay for unforeseen expenses or a trust fund to set aside money for a specific purpose. Individual and institutional investors can also place money in different types of funds with the goal of earning money.


    - MAY 2020


    THE BUG STOPS HERE. AWARENESS AND PRECAUTIONARY MEASURES TO BEST MITIGATE AND PREVENT CYBER THREATS Cyber threats are evolving rapidly and leveraging real-world events to deceive victims. With COVID-19 driving a surge in cloud adoption and remote working, we are seeing attacks targeting cloud users, remote workers and organisations in a whole host of differing sectors. As the world continues to get to grips with the disruption caused by the wake of the Corona Virus Pandemic (COVID-19), business organisations must begin planning for life and business online, on a long-term basis, so as to be best prepared for the unknown – come what may and be most resilient thereto, however and whichever way possible. As part of that reality, all must begin preparing and implementing strict, air tight measures to secure employees, networks and systems while working remotely; and must promptly take steps to mitigate the otherwise distinctly higher cybersecurity and data privacy risks facing any confidential and proprietary information.


    - APRIL 2020


    COVID-19 and Force Majeure: The back-and-forth that contracting world needs to understand. In the wake of the accelerated spread and impact of COVID-19, we have now been thrust into unprecedented times with extreme disruptions to our economy and society. Governments and other public authorities have imposed various containment restrictions to movement, travel and the general supply of goods and services. While the most distressing aspect continues to be the threat to human health, the unexpected nature of the virus has resulted in a slow-down in business operations and an increased focus on the contractual obligations of businesses and their likely inability to perform these obligations. Considering the economic slowdown and supply chain disruption brought about by the COVID-19 outbreak, the possibility of invoking force majeure to avoid liability from delayed, interrupted or otherwise failed performance of contracts is being widely debated.


    - MARCH 2020


    THE INDIAN SPRING AND EMIRATI SUMMER OF CRYPTOS It was almost divine to start the day, with the news of Indian Supreme Court setting aside the impugned Reserve Bank of India (RBI) circular last week which directed the RBI regulated entities to not deal in virtual currencies and also exit existing relationships in this regard! And so began the India’s Crypto Winter with a forced break up.


    - FEBRUARY 2020


    The rise of APIs Karm Legal Consultants share insight on the impact of Application Programming Interfaces on the banking and finance sector and the approach taken by regulators like the UK’s FCA and ADGM’s FSRA on the subject. API’s can be thought of as a user interface which as a computer application interacts with another over the internet or within a private network using predefined rules described in the API. APIs facilitate a way to share, move and access information, previously ring fenced within an isolated system. They are the underlying infrastructure that form the technological basis for most open banking initiatives.


    - JANUARY 2020


    KARM Legal Consultants are proud Members of the Arab Monetary Fund Regional Fintech Working Group, recently having been privileged to assist the Working Group in the research and drafting of three (3) policy guidelines in Fintech. One such policy included The Cyber Resilience Oversight Guidelines for the Arab Region, concerning Financial Market Infrastructures, presented at the Third Meeting of the Arab Regional Fintech Working Group on 15 and 16 December 2019; and which will be formally published by the Arab Monetary Fund during early 2020. We hope and trust that our work will be an informative resource for our readers. Herewith a brief introduction to Cyber Resilience.


    - OCTOBER 2019


    On October 15, 2019 the Securities and Commodities Authority of the UAE published the draft regulations concerning crypto assets, for public consultation and comment, with the aim to gather feedback from the industry players (“Draft Regulations”). The Regulations are drafted to govern all aspects of the Crypto Assets industry within the UAE, ranging from token issuance requirements, to trading and safekeeping practices, with emphasis on protecting investor interests through stringent compliance with financial crime prevention measures, crypto-asset sake-keeping standards, information security controls, technology governance norms and the regulation of conduct of business requirements for all market intermediaries.


    - SEPTEMBER 2019


    In its simplest sense, crowdfunding is solicitation of funds (in small amounts) from multiple investors through a web-based platform or social networking site for a specific project, business venture or social cause. It is becoming an increasingly popular way to connect entrepreneurs in need of finance with investor in search of various forms of returns. What is interesting is that modern day crowdfunding’s history can be traced to as early as 1700s, roughly three centuries before the launch of ‘Artist Share’ the first dedicated Crowdfunding platform


    - AUGUST 2019


    Digital advisory services, often colloquially referred to as the “Robo-Advisory” services, has been a topic of interest in the last few years, particularly from the perspective of investor-protection and regulatory outreach. While there are many definitions and connotations to the term, in our view the most comprehensive is the one proposed by Paolo Sironi


    - JULY 2019


    With a growing online footprint, one is at a higher risk of privacy breach than ever before and therefore, regulatory implementation around the world is ongoing, progressing rapidly with Legislators and Regulators focusing on transforming the legal framework to include policies that support innovation, but which, simultaneously protects individuals and entities from risks associated with data and privacy breaches. Part I of KARM’s newsletter in June 2019[1] focused on the importance of data protection and the classification of data, along with an introduction to specific legislation within the United Arab Emirates (“UAE”) mainland and Free Zone areas.


    - JUNE 2019


    We, as humans find ourselves in a technologically advanced and digital age, where the world is interconnected. Who could have ever imagined that the launch of the World Wide Web (the “Web”) on 06 August 1991 would amass to what the Web exists as today, where our entire existence as humans is defined online, from simple acts such as sharing our family vacation photographs on social media platforms (WhatsApp, Facebook, Instagram, Twitter, but to name a few) to more extensive and personal, sensitive information sources such as our medical histories having been documented on a digital database – this all being in existence on one gigantic network.


    - MAY 2019


    In March, 2018 the Telecommunications Regulatory Authority of UAE issued a Regulatory Policy on the Internet of Things (“IoT”) (collectively, “Policy”). The Policy was made public only last month and the implementation timelines for the same are yet to be ascertained.


    - APRIL, 2019


    In February this year, the Central Bank of Bahrain (CBB) introduced a Crypto Asset Module in Capital Markets volume of its Rulebook. The Module contains the rules concerning trading, dealing, advisory services, portfolio management services in accepted crypto-assets as a principal, agent, custodian or crypto-asset exchange within or from the Kingdom of Bahrain (“Module”).


    - MARCH 2019


    Artificial Intelligence - normally understood as the simulation of human intelligence processes by machines, especially computer systems. These processes include learning (the acquisition of information and rules for using the information), reasoning (using rules to reach approximate or definite conclusions) and selfcorrection. The research and test-cases on AI have been in existence for over half a century now - as early as in 1940s and 1950s. Right from Turing’s test, the game AI to the Dartmouth conference, the idea of AI was conceived decades ago. It is only now that the discussion has gathered momentum. Why should you care? In the world that we live in, we are both the users and contributors of the ‘intelligence’ of the not so artificial bots around us. Siri, Amazon e-commerce, Netflix, Google Maps, Spotify are only a few examples of the leading players that use AI solutions. As both a user and a contributor, is important to know the dynamics of an AI system. Our newsletter this month, touches upon the attribution of liability and privacy in case of AI and assesses the extant principles of law in UAE in this regard. We also discuss the Ethical AI Toolkit launched by Smart Dubai earlier this year.


    - FEBRUARY 2019


    The Abu Dhabi Global Market (ADGM), a financial free zone located in the UAE, has been one of the first regional regulators to adopt extensive regulations to address the concerns raised by token offerings and cryptocurrencies. On 25th June, 2018, the ADGM Financial Services Regulatory Authority (“FSRA”) issued Guidance on Regulation of Crypto Asset Activities in ADGM (the “Guidance”) which should be read in conjunction with FSRA’s Guidance on Regulation of Initial Coin/Token Offerings and Virtual Currencies under the Financial Services and Markets Regulations 2015 published on 9 October 2017 (the “ICO Guidance”). In this month’s newsletter, we summarize and discuss, ADGM’s approach on digital assets and regulating the crypto asset business.


    - JANUARY 2019


    Team Karm, was proud to advise and represent our start-up client that built the 'Hayat' app. The Hayat app will use blockchain technology to create a database, allowing both nationals and expatriates to express their wish to donate organs after their death, by registering for the programme. His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, launched the ‘Hayat’ registry at the Ministry of Health and Prevention (MoHP) pavilion of the Arab Health forum on January 30, 2019.


    - DECEMBER 2018


    With the year-end approaching fast, there is so much to reflect on. The highlight for us was the launch of Karm Legal Consultants this year. At a global level, this year saw the implementation of the game-changing regulation of the century - The GDPR! More on the home turf, ADGM launched its regulatory framework for regulating crypto-assets and crypto exchanges.


    - NOVEMBER, 2018


    Over the last few years technological innovations have introduced everyone to a whole new world of digital economy. While most jurisdictions globally have been contemplative, the United Arab Emirates has been one of the few jurisdictions, which has been extremely supportive of technological innovations.

Legal Updates

  • Convertible Notes, SAFEs and Liquidation

    Start-ups and seed investors nowadays are likely to use Convertible Notes and Simple Agreements for Future Equity as methods of seed financing because the two options are fast, simple and cost effective in comparison with traditional seed financing. Both options offer start-ups an opportunity to raise capital and investors an option to gain shares of a promising startup. However, while both options share some similarities, entrepreneurs and investors should consider which options are more preferable to them.

    Trust In DAOs  

    Trust In DAOs  

    SAFEs as a mode of fundraising

    In 2013, Y Combinators created a new form of agreement named “Simple Agreement for Future Equity,” also known as “SAFE,” a contract that allows startups or companies to raise investment capital in the seed rounds. A seed round refers to a series of investments in which a limited number of investors “seed” a new company. This money is often used to support initial market research and early product development. In this agreement, the investor is granted future equity rights in the company that triggers liquidity events.

  • Decoding eSports Based NFTs

    NBA Top Shots, a series of digital collectibles based on basketball video highlights, has seen a tremendous rise in popularity since its inception, cementing the use case of NFTs and bringing the valuation of Dapper Labs, the company behind it, to a whopping $7.5 billion. This feat is impressive but understandable given that a LeBron James Top Shot alone recently sold for over $387,000. NFTs are one of the fastest-growing applications of blockchain. At the same time, eSports is a fast-developing segment of the gaming industry. Recently we have seen an interesting overlap between the two. This article explores the legal nuances related to eSports-inspired NFTs.

    CB UAE's Large Value Payment Systems- 10 Takeaways

    The Central Bank of the UAE (“CBUAE”) Large Value Payment Systems (“LVPS”) Regulation (the “Regulation”) (Link) came into force on the 10 February 2021. This Regulation was published alongside the Retail Payment System (“RPS”) regulation with the aim of promoting a robust financial infrastructure and building the essential framework for financial stability and consumer protection in the UAE.

    CB UAE's Retail Payment Systems- 10 Takeaways

    This week, the Central Bank of UAE (CBUAE) released the Retail Payment Systems Regulation (RPS) (Regulation) (link) which governs RPS, defined to include systems which handle low-value, high volume payments such as cheques, credit transfers, direct debit, card payments, amongst other things. This regulation comes in consonance with the SVF regulations, the Crypto-Assets Guidelines and the Large Value Payment Systems Regulations. Together, these instruments indicate that UAE is moving quick to establish itself as a leader in blockchain, crypto and fintech. Here are the top 10 takeaways from the Regulation.


    This week the Securities and Commodities Authority (SCA) released its ‘Administrative Decision No. (11) of 2021 concerning Guidance for Crypto Asset Regulations’ (link) (or Crypto Asset Guidance/ Guidance) which throws light on, and clarifies the application of the SCA’s Board of Directors’ Decision No. 23/Chairman of 2020 concerning Crypto Assets Activities Regulation (link) (or the Crypto Assets Regulation/ Regulation), which was released late last year.

    SVF and Crypto Assets Legislations- Highlights

    In a ground-breaking move to address the rapid technological advancements of stored value products and services, the Central Bank of UAE has repealed and replaced the ‘Regulatory Framework for Stored Values and Electronic Payment Systems’ (2016) to implement the ‘Stored Value Facilities (SVF) Regulations’. This regulation is aimed at ensuring the secure and efficient governance of the digital payments industry and stored value facilities.

    Consortium Blockchains, Private Chains and GDPR

    One of the many solutions makes a classification between different blockchains on the basis of permission levels for different categories of participants.[3] In this regard, a blockchain technology can generally be divided into two broad categories: Public blockchains like Bitcoin and Ethereum and permissioned blockchains like Hyperledger, R3 Corda etc. Permissioned blockchains can be further grouped into two categories on the basis of the number of entities governing the system.

  • Do you have a UAE Will?

    Today’s addresses the need of having a validly executed and legally recognised Will, in the UAE. Please view our informative, short video enclosed. By creating a solid foundation for your estate planning, including that of executing a last Will, future additions or changes to your family’s circumstances won’t feel as daunting when the time comes. After all, life never slows down and no-one is invincible. Through means of a Will, you can: TAKE CONTROL OF YOUR LIFE! HAVE YOUR SAY TO PROTECT YOUR FAMILY AT A TIME OF HEARTACHE. We, at KARM, will be happy to assist in advising & guiding you as to best give effect to your testamentary wishes. Please feel free to reach out to our team of professionals to set up a virtual consultation, at your convenience. We look forward to connecting with you.

    10 Points- On SEBI's Regulatory Sandbox

    On June 5th SEBI released a cirular to introduce a framework for “Regulatory Sandbox”. Under this sandbox framework, entities regulated by SEBI that shall grant certain facilities and flexibilities to experiment with FinTech solutions in a live environment and on limited set of real customers for a limited time frame. These features shall be fortified with necessary safeguards for investor protection and risk mitigation.

    ENTERPRISE BLOCKCHAINS-Creating Opportunity and Remaining Competitive

    Some of the basic blockchain applications such as system of records and identity management is required by most large-scale organisations. Moreover, the blockchain is now being implemented to offer Software as a Service applications to enterprises. This is being done through providing services like tracking and traceability of products. Following this, J.P Morgan has introduced an enterprise version of the ethereum labelled as “Quorum” which has resolved concerns around privacy and scalability. Quorum is offered as a blockchain as a service offering. Ethereum has also innovated to address all issues which are being faced by enterprises and has formulated an Enterprise Ethereum Alliance (“EEA”) to work on further developments and satisfy all requirements of large-scale organisations.

  • WeWork: Vary and Wary Power

    On a fateful September morning the world woke up to the news of WeWork pulling the plug on its IPO. WeWork, the co-working unicorn startup, whose IPO was one of the highly anticipated public offerings of 2019 saw an abrupt drop in its valuation.


    Would you believe if someone were to tell you that you can shop online without “agreeing” to any terms and conditions? No, right? Or have you ever wondered why your favorite item from the retail website that you browsed ten minutes ago is popping up on your Instagram account? At some point in our lives, we all have browsed websites and downloaded mobile applications without reading the much omnipresent terms of use. So, is it necessary to read these terms?

    The Curious Case of Consent

    “For in reason, all government without the consent of the governed is the very definition of slavery.” - Jonathan Swift


    The two poles of centralization and decentralization have been as old as the human civilization in itself. Capitalism & Socialism, Presidential and Parliamentarian are all the forms of centralization/ decentralization debate that have existed for times immemorial.

    SMART CONTRACTS: A UAE Perspective

    What are ‘Smart Contracts?’

    Role of Startups in Economic Prosperity

    When it comes to startups, a general perception is that it needs to be in a developed country where all the resources are available. In truth, that misses the point: startups can begin anywhere, and it's often the countries with the greatest needs that present the biggest opportunities.

  • Input Tax On Entertainment Services in UAE


    The United Arab Emirates has been one of the few jurisdictions, which has been supportive of the technology. Recently the UAE Government announced the UAE Blockchain Strategy 2021 which aims at capitalising on blockchain technology to transform 50 per cent of government transactions into the blockchain platform by 2021. UAE also happens to be the only jurisdiction around the world to have four regulators acting as incubators to blockchain projects and start-ups.


    Much has been spoken about the disruption and the innovation brought about by the cryptocurrencies and blockchain in general. But amongst other things, a new technology almost always disrupts and affects the conventional methods of managing a workforce.

  • STARTING OUT? Read this first.

    First things first, let’s admit - starting-out is bold. While all of us have heard that most of the start-ups fail with varying percentages in different jurisdictions, there is always hope that your start-up won’t follow suit. As lawyers, this is what we hope for, for you.


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