The Dubai Financial Services Authority (DFSA), the Dubai International Financial Centre (DIFCregulator, )’s unveiled its cryptocurrency token regime on November 1st. It is the second phase of the DFSA’s work towards the October 2021 implementation of a regulatory framework for crypto assets.
While meeting the DFSA’s regulatory objectives, the crypto token regime aims to foster innovation in a measured, responsible, and transparent manner. It seeks to facilitate the market for innovative financial products while protecting the interests of customers.
The notification adds that the regime not only complies with anti-money laundering (AML)/ counter-terrorism financing (CTF) but also addresses risks relating to consumer protection, market integrity, custody, and financial resources for service providers.
DFSA Chief Executive Ian Johnston said, “As a progressive regulator, the DFSA recognises the growing interest in innovative financial products. Our work to develop a comprehensive Crypto Token regime has taken into account feedback from a broad range of stakeholders. It aims to strike a balance between encouraging innovation in the DIFC and protecting the consumers of these financial products.”
It was in October last year that the DFSA launched its regulatory framework for tokens. The framework reflected the proposals outlined in a consultation paper issued by the watchdog in March 2021, and formed the first phase of the DFSA’s Digital Assets regime.
Evolving crypto regulations in Dubai
Only DFSA-approved crypto tokens that meet certain requirements can be used in the DIFC. The DFSA will publish an initial list of recognized crypto tokens on its website.
All companies, whether currently authorized by the DFSA or not, that wish to conduct cryptocurrency token-related business in or from the DIFC can apply through the DFSA website.
The central bank of Dubai does not license cryptocurrencies, though a number of cryptocurrency exchanges have been granted permission to operate within financial-free zones.