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.

A Dubai court has made a groundbreaking decision in a case where an employee accused her employer of failing to pay her more than 5,000 EcoWatt (EWT) tokens that were part of a contractual agreement, according to a report in Lexology.

According to the report, the employer, who the employee claimed had improperly dismissed him, did not pay the crypto portion of his salary for six months. The court ruled in the employee’s favor, recognizing the validity of the crypto as a form of salary and ordering the EcoWatt payment to be made as initially agreed in the employment contract.

It also stated that wages are a fundamental right and an employer is obliged to fulfil the terms of a contract, including its crypto component, without any evidence proving payment.

A year earlier, the same court ruled against a similar plaintiff who claimed their employers had failed to pay them using the same EcoWatt tokens. In that case, the court rejected the plaintiffs’ claims based on the fact that they did not provide a clear method for determining the par value of the EcoWatt tokens in question.

This latest ruling, however, appears to overturn this cautious approach and reflects a broader interpretation of the UAE’s labor laws, particularly in relation to digital assets in employment contracts.

The city of Dubai was one of the first jurisdictions to join the crypto movement, starting with the 2016 Dubai Blockchain Strategy. Favorable tax regulations and a booming venture capital investment scene have made the city a favorite among crypto projects. Companies like Binance, OKX, and Crypto.com have a significant presence in the city and have 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 cryptocurrency. Former Binance CEO Changpeng Zhao, for example, previously admitted that a large percentage of the exchange’s employees were paid in cryptocurrency. The court’s recognition of crypto as valid payment now sets a new legal precedent that should guide the behavior of such companies in the UAE.