Dubai court recognizes crypto salaries in landmark ruling

The Dubai Court of First Instance has set a new precedent by recognizing cryptocurrency as a valid form of salary payment under employment contracts.

According to a report appearing on Lexology, the Dubai court made the landmark decision in a case where an employee accused their employer of failing to pay more than 5,000 EcoWatt (EWT) tokens, which had been part of their contractual agreement.

According to the report, the employer, whom the employee also alleged fired them improperly, did not pay them the crypto portion of their salary for six months. The court ruled in favor of the employee, acknowledging the validity of cryptocurrency as a form of salary and ordering the EcoWatt payment to be made, as initially agreed upon in the employment contract.

It also stated that wages are a fundamental right and that an employer was obligated to fulfill the terms of a contract, including any crypto component, without evidence proving payment.

A year ago, the same court ruled against a similar complainant who alleged that their employer failed to pay them using the same EcoWatt tokens. In that case, the court based its dismissal of the plaintiff’s claims on the fact that they did not provide a clear-cut method of determining the fiat value of the said EcoWatt tokens.

However, this latest judgment seems to have upended that cautious approach and reflects a more expansive interpretation of the United Arab Emirates’ labor laws, especially with regard to digital assets in employment contracts.

The city of Dubai was among the early jurisdictions to jump on the crypto bandwagon, starting with the 2016 Dubai Blockchain Strategy. Its favorable tax regulations and booming venture capital investment scene made the city a favorite among crypto projects. The likes of Binance, OKX, and Crypto.com have a significant presence in the city, having recently acquired virtual asset service provider licenses, a requirement to operate a crypto platform in the city. 

Many of these companies pay their employees in crypto. For instance, former Binance CEO Changpeng Zhao previously admitted that a large percentage of the exchange’s employees get paid in crypto. The court’s recognition of crypto as a valid payment now sets a new legal precedent that should guide the conduct of such companies in the UAE.