While this decision marks a significant step towards crypto adoption, it stops short of allowing full salary payments in digital currencies
A recent UAE court decision has highlighted the growing acceptance of cryptocurrency in employment contracts, though full crypto salary payments remain restricted.
The ruling, which ordered an employer to pay promised digital EcoWatt tokens as part of an employment benefit package, could pave the way for broader crypto adoption in the UAE‘s financial framework.
While this decision marks a significant step towards crypto adoption, it stops short of allowing full salary payments in digital currencies.
Anna Zeitlin, a partner in Fintech and Financial Services at Addleshaw Goddard, emphasised that the UAE’s Wage Protection System still mandates salary registration in dirhams.
“It is important to note that this case related to the benefits due to an employee under their employment contract; and not the actual salary itself,” Zeitlin told Arabian Business.
The ruling opens up possibilities for wider crypto integration in the UAE economy, with experts eyeing potential applications in real estate and retail sectors. However, the decision also underscores the delicate balance regulators must strike between embracing financial innovation and maintaining traditional wage protections.
Legal framework
The decision aligns with existing labour laws, particularly Article 22 of Federal Decree-Law No. (33) of 2021, which Zeitlin noted “permits for salaries to be paid to employees ‘in UAE Dirham and may be paid in another currency if it is agreed upon between both parties in the employment contract’.”
However, she cautioned that “the WPS would need to be updated to reflect these alternatives.” Zeitlin also highlighted potential risks, stating that “permitting employees to be compensated in cryptocurrencies that have experienced huge value fluctuations may prove risky and might leave employees at the mercy of market drops.”
Future implications
Zeitlin expressed optimism about the ruling’s broader implications. “It is hoped that this case will pave the way for salaries (not just employment benefits) to be paid in cryptocurrencies, and for the WPS to permit the registration of currencies other than just AED.”
She suggested that authorities could consider implementing safeguards, such as “salary payments in Central Bank Digital Currencies (CBDCs) or stablecoins” to mitigate volatility risks.
“No doubt, the world is watching these developments and it is unlikely that the international financial regulators and institutions will be critical of such a court judgment,” she added.
Wider adoption
Zeitlin envisions broader crypto integration in the UAE economy.
“It would be great to see wider adoption of cryptocurrency in other forms of payments, e.g. in retail outlets or utility bills.” She expressed particular interest in the real estate sector, suggesting that blockchain technology could significantly expedite transactions.
“If the various land departments tokenised their title deeds and added them to a blockchain, real estate transactions could happen in seconds rather than weeks,” Zeitlin said.
“Furthermore, permitting payments in cryptocurrency for real estate would open the market up to a much wider audience.”
As the UAE continues to position itself as a crypto-friendly jurisdiction, this court ruling marks another step towards integrating digital assets into the country’s economic framework.
