Dubai’s financial regulator plans to launch crypto regulations in the fourth quarter

October 26, 2021

The Dubai Financial Services Authority (DFSA) plans to launch a separate regulatory framework covering ‘exchange tokens’ (otherwise known as cryptocurrencies), utility tokens and certain asset-backed tokens (Stablecoins) in the fourth quarter.

“Our consultation on investment tokens enabled us to understand what firms were looking for in a regulatory framework and introduce a regime that is relevant to the market,” said Peter Smith, Managing Director, Head of Strategy, Policy and Risk at DFSA.

Dubai’s financial sector watchdog launched its regulatory framework for investment tokens. The framework reflects the proposed regulations outlined in Consultation Paper 138 issued in March last and will form the first of two phases of the DFSA’s Digital Assets regime.

The regulatory framework defines an investment token as either a security token or a derivative token. They are:

  • A security or derivative in the form of a cryptographically secured digital representation of rights and obligations that is issued, transferred and stored using distributed ledger technology (DLT) or other similar technology; and
  • A cryptographically secured digital representation of rights and obligations that is issued, transferred, and stored using DLT or other similar technology and: (i) confers rights and obligations that are substantially similar in nature to those conferred by a Security or Derivative; or (ii) has a substantially similar purpose or effect to a Security or Derivative.

The investment tokens’ regulatory framework applies to persons or entities interested to market, issue, trade or hold investment tokens in or from Dubai International Financial Centre (DIFC). It applies to authorised firms wishing to undertake financial services relating to investment tokens or managing discretionary portfolios or collective investment funds investing in investment tokens.

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