The framework is the first phase of the DFSA’s two-phase Digital Assets regime. It is built on proposals from a consultation paper issued in March this year, and covers regulatory aspects for security tokens and derivative tokens.
The DFSA announcement defined these as cryptographically secured digital securities or derivatives built using distributed ledger technology (DLT) or a similar tech.
Regulatory framework for crypto, stablecoins coming soon
The DFSA regulatory framework for investment tokens applies to entities looking to market, issue, trade or hold these tokens in or from the DIFC, as well as authorised firms providing related financial services. These services include dealing in investment tokens, providing advisory services, arranging transactions, or managing portfolios or investment funds.
The DFSA is also preparing proposals for tokens that are not covered by the current framework, including cryptocurrencies, utility tokens and stablecoins, the statement said. It has plans to issue a second consultation paper in this regard by Q4 this year.
Currently, the UAE dirham is the only recognised legal tender in the country. However, Dubai has taken a progressive stance towards a number of alternatives, including allowing crypto trading and issuance in multiple free zones. These include the Dubai World Trade Centre, the Dubai Airports Free Zone Authority, and the Dubai Multi Commodities Centre. The UAE is also working on its own central bank digital currency, known as the GovCoin.
Peter Smith
“Creating an ecosystem for innovative firms to thrive in the UAE is a key priority for both the UAE and Dubai Governments, and the DFSA.
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,”
Peter Smith, Managing Director, Head of Strategy, Policy and Risk at the DFSA, said.
