Posted inNews, Crypto, Sectors

Dubai Financial Services Authority enhances its Crypto Token framework

Since the implementation of the Crypto Token regime in 2022, global standards have significantly evolved.

By Nivetha Dayanand
Add as a preferred source on Google
Crypto
Credit: Unsplash
by Nivetha Dayanand

The Dubai Financial Services Authority (DFSA) has announced key amendments to its Crypto Token regime, building on the proposals in Consultation Paper 153 – Updates to the Crypto Token regime, published in January 2024. These changes aim to refine and advance the regulatory environment for Crypto Tokens in the Dubai International Financial Centre (DIFC).

The amendments address several key areas:

Funds

  • Allowing Units of External and Foreign Funds to invest in recognised Crypto Tokens.
  • Permitting Domestic Qualified Investor Funds to invest in unrecognised Crypto Tokens.

Custody

  • Custody of Crypto Tokens.
  • Staking of Crypto Tokens.

Financial crime

  • Compliance guidance for financial crime, including the “travel rule.”
  • Enhanced transaction monitoring and blockchain analysis.

Recognition of crypto tokens

  • Establishing recognition criteria for Fiat Crypto Tokens (stablecoins).
  • Implementing a fee for the recognition of Crypto Tokens.

“These updates are influenced by recent market developments, international standards, and the DFSA’s supervisory experience,” the statement read. “Over the past two years, the DFSA has interacted with over 100 firms seeking licenses, providing valuable insights into market dynamics and regulatory requirements.”

Since the implementation of the Crypto Token regime in 2022, global standards have significantly evolved. The International Organisation of Securities Commissions (IOSCO) has issued recommendations on crypto, digital assets and decentralised finance (DeFi), while the Basel Committee has proposed amendments to standards for banks’ exposure to Crypto assets, particularly focusing on stablecoins’ reserve assets.

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