What it is
The Innovation Testing Licence (ITL) Programme is the DFSA’s version of a regulatory sandbox.
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Some of the key ways in which the DFSA supports innovation are:
Below, we provide more information on each area.
The last ITL Cohort accepted applications in July 2021. The next cohort will be announced soon. Note that neither acceptance of your application nor acceptance into the Programme guarantees that you will be approved for a licence.
The Innovation Testing Licence (ITL) Programme is the DFSA’s version of a regulatory sandbox.
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DFSA Regulatory Regimes for Crowdfunding, Money Services and Investment Tokens
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Licences under the ITL Programme typically work in the following way:
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To be eligible for the ITL Programme, an applicant and its business must meet the criteria as set out in DFSA Rule, GEN 13.4
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Fill in the Cohort Application to apply.
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The DFSA Runs the ITL Programme once a year
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Contacts, FAQs, and sample applications.
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The financial services sector is one of the largest users of digital technologies, using solutions like digital identification, mobile applications, artificial intelligence, distributed ledger technology, and cloud technology. These solutions have rapidly transformed the way customers access financial services as well as the way financial services providers conduct their business to meet the changing needs of their customers and global interconnected markets.
These developments present benefits to consumers such as financial inclusion, access to a wider range of financial products and greater convenience and efficiency; but they are not risk free. They present risks to data privacy, mis-selling and a general lack of consumer understanding about how these new products and services work. There are also risks to the financial sector such as legal and regulatory uncertainty, cybersecurity, fraud and money laundering and the financing of terrorism.
While the DFSA recognises the important role innovation and technology plays in enabling a wide range of financial services business models and products and services, the DFSA also recognises its own role in providing clear regulatory direction for Authorised Firms providing, and for customers accessing, innovative financial products and services.
The DFSA has an extensive regulatory regime enabling many different types of financial services business models and products and services. In many cases, innovative companies or those using innovative technologies are able to operate their business under the existing regulatory regimes. In some cases, certain activities or uses of technology may require amendments to existing regimes.
Please contact [email protected] if you are unsure about which particular regulatory regime applies to your innovative financial product or service.
We aim to be accessible and open in our thinking and our focus to create a dynamic and sustainable innovative ecosystem in the DIFC.
We aim to foster an open and transformative environment in the DIFC to discuss and promote financial and technological innovation and the associated challenges, risks, benefits and opportunities.
We are committed to actively engaging and growing with the wider financial services markets and understand the value, confidence and transparency that such engagement brings. We frequently engage with the global community and attend international, regional, and local events, both as delegates and speakers.
We are committed to a future of innovative and dedicate specific resources and expertise to grow our innovative DIFC community.
A Market Overview of Digital Custody for Digital Assets – Digital Custodian Whitepaper
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Risks, Threats and Potential Opportunities for the Financial Services Industry
Bryan Stirewalt, CEO, DFSA
The Deloitte Regulatory and Financial Crime Conference
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1 | Australia | Australian Securities and Investments Commission (2017) |
2 | Hong Kong | Financial Services Agency of Japan (2018) |
3 | Hong Kong | Hong Kong Insurance Authority (2017) |
4 | Hong Kong | Securities and Futures Commission (2017) |
5 | Japan | Monetary Authority of Singapore (2018) |
6 | Luxembourg | Commission de Surveillance du Secteur Financier (2019) |
7 | Malaysia | Securities Commission (2018) |
8 | Singapore | Hong Kong Monetary Authority (2017) |
We are actively engaged with the DIFC FinTech Hive and the innovative businesses that participate in the Hive’s various innovation programmes including the FinTech Accelerator Programme, Scale-up Programme, and Startup Bootcamp.
To find out more about the DIFC FinTech Hive
Visit HereThe DFSA is a founding member of the GFIN and currently sits on the GFIN Coordination Group, which is responsible for setting the strategic direction of GFIN. We are also actively engaged across all GFIN work-streams including the Cross-Border Testing Pilot, where in the 2019 Cohort, the DFSA worked with two Cross-Border applicants.
To find out more about GFIN, visit www.theGFIN.org / www.theGFIN.com
One of the first things to understand is whether you need to be regulated. To do so, you need to check the DFSA Rulebook to ascertain whether your proposed business activity is a regulated financial services activity. This will help in determining whether you need to be licenced by the DFSA to operate your business in or from the DIFC.
If the products or services you offer, or business activities you propose to conduct, fall within a regulated financial service, you have two options.
If your products and services or business activities are not a regulated financial service, you will not require a licence from the DFSA to operate in or from the DIFC. This could be because you are a technology provider or are partnering with regulated firms. However, the DFSA may still be interested in hearing more about what you are doing if your business or service offering involves an innovative technology.
It may not be clear whether the service a you provide, or intend to provide, is a financial service that requires regulation. If this is the case, take a look at GEN Rule 2.2 in the DFSA Rulebook Modules and review our recent consultation papers. If you are still uncertain, you may wish to consider seeking advice from appropriate legal and other professional advisers specialising in the DIFC jurisdiction. If after seeking advice, you are still uncertain, you may contact the DFSA.
Still have questions? Contact the DFSA.
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