UAE: DFSA enhances its Crypto Token framework, fostering innovation

The Dubai Financial Services Authority (DFSA) today announced some key amendments to its Crypto Token regime.

These changes stem from the proposals outlined in “Consultation Paper 153 – Updates to the Crypto Token” regime published in January 2024 and mark a significant step in refining and advancing the regulatory environment for Crypto Tokens in the Dubai International Financial Centre (DIFC).

The amendments addressed the ability to offer units of external and foreign funds investing in recognised Crypto Tokens, the ability for domestic qualified investor funds to invest in unrecognised Crypto Tokens, custody of Crypto Tokens, and staking of Crypto Tokens.

The amendments also addressed financial crimes through anti-financial crime compliance guidelines, including applying the “Travel Rule,” transaction monitoring and blockchain analysis, the recognition of Crypto Tokens, and fees for recognising Crypto Tokens.

These changes are based on recent market developments, recommendations from international standard-setters and the DFSA’s supervisory experience.

Over the past two years, the DFSA has engaged with over 100 firms looking to be licensed, gaining valuable insights into the market dynamics and regulatory needs.

Ian Johnston, Chief Executive of the DFSA, said, “Our objective with the Crypto Token regime is to foster innovation in a responsible and transparent manner while ensuring we meet our regulatory objectives. At the DFSA, we have taken a balanced approach in developing this regime and remain committed to evolving it in line with global best practices and standards.”