The Dubai Financial Services Authority (DFSA) has unveiled revisions to its regulatory framework for cryptocurrency tokens in order to strengthen and advance the regime within its special economic zone. As an independent regulator in the United Arab Emirates (UAE), the DFSA oversees entities registered in the Dubai International Financial Centre (DIFC), which is one of the country’s special economic zones. On June 3, the DFSA announced changes to its crypto token regime, taking into account feedback from its Consultation Paper 153, which was published in January 2024. The amendments covered various important areas, including funds investing in crypto tokens and the recognition process for such tokens. Previously, the DFSA had imposed restrictions on fund activities involving crypto tokens. However, the regulator acknowledged that fund and asset managers found the regime too stringent. In response, the DFSA revised the regime to allow external and foreign funds to offer units in recognized crypto tokens. Additionally, the changes also permitted domestic qualified investor funds to invest in unrecognized tokens, as long as the exposure did not exceed 10% of the fund’s gross asset value (GAV). The application fee for token recognition was also reduced from $10,000 to $5,000 per token, following feedback that the previous fee was too high. The DFSA introduced additional recognition criteria for stablecoins, which are crypto tokens pegged to fiat currencies. The regulator emphasized that these changes should not be interpreted as a more lenient stance, but rather as a means to recognize fiat crypto tokens issued in other jurisdictions with comparable regulation. The objective of the DFSA’s crypto token regime is to foster innovation in a responsible and transparent manner, according to DFSA chief executive Ian Johnston. The changes to the regime reflect market developments, recommendations from international standard setters, and the regulator’s supervisory experience. The DFSA has engaged with over 100 firms seeking licensing in the past two years, gaining valuable insights into market dynamics and regulatory requirements.
Dubai's financial regulator introduces revised regulations for cryptocurrency tokens in funds