The Dubai Financial Services Authority (DFSA) announced today 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 address the following areas:

Funds:

- 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:

- Custody of Crypto Tokens

- Staking of Crypto Tokens

Financial Crime:

- Financial crime (including the “travel rule”) compliance guidance

- Transaction monitoring and blockchain analysis

Recognition of Crypto Tokens:

- Recognition criteria for Fiat Crypto Tokens (stablecoins)

- Fee for recognition of 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.

Since the Crypto Token regime came into force in 2022, international standards have evolved significantly. The International Organisation of Securities Commissions (IOSCO) published recommendations on Crypto, Digital assets, and Decentralised Finance (DeFi). In addition, the Basel Committee proposed amendments to the standards for banks’ exposures to Crypto assets, focusing on reserve assets of stablecoins.

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 the development of this regime and remain committed to evolving it in line with global best practices and standards.”

All firms, whether currently authorised by the DFSA or not, who are interested in conducting business related to Crypto Tokens within or from the DIFC, can apply via the DFSA website.

For more information on the draft amendments, click here.​​