According to the press release, the updated Rulebooks include enhanced supervisory mechanisms across the following regulated virtual asset (VA) activities:

• Advisory services
• Broker-dealer services
• Custody services
• Exchange services
• Lending and borrowing services
• VA management and investment services
• VA transfer and settlement services
• Virtual Asset Issuance Rulebook

Key refinements in Version 2 include "strengthened controls around margin trading and token distribution services, clearer definitions for collateral wallet arrangements, and harmonised compliance requirements across all licensed activities." The updates are designed to "promote greater market discipline, risk transparency, and operational resilience across Dubai’s VA ecosystem."

A 30-day transition period has been granted to all impacted virtual asset service providers, with full compliance required by 19 June 2025. VARA’s Supervision Teams will engage directly with each licensed entity to provide activity-specific guidance as needed.

According to the press release, the Tokenisation Regulatory Sandbox forms part of the DFSA’s Innovation Testing Licence programme and supports the regulator’s broader commitment to fostering innovation while maintaining market integrity and protecting investors. Expressions of interest came from a "diverse range of sectors that are exploring the tokenisation of financial assets and instruments, including those associated with the tokenisation of shares, bonds (including Islamic bonds (sukuk)), units in a fund, and the trading and safe custody of those assets – reflecting the broad potential of tokenisation across the financial ecosystem."

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.

At the same time, the authority also enacted a new Law of Security, replacing the 2005 law. The revised regime is modelled on the UNCITRAL Model of Secured Transactions and enhances DIFC’s securities regime "to keep pace with international developments in this field and to ensure DIFC remains at the forefront of best practice".

The consultation seeks public comment on proposals for amendments to the regulatory regime for persons wishing to provide financial services activities in respect of crypto tokens. The development of these proposals is based on the DFSA's "supervisory experience, recent market events and recommendations from international standard setters."

The proposals in the consultation relate only to crypto tokens and do  not cover rgulation of investment tokens. 

The deadline for comments is 4 March 2024.

The DAL lays down the foundational legal characteristics of a Digital Asset as a matter of property law. It addresses issues such as how one acquires and transfers title to a digital asset, how a digital asset should be characterised as a matter of property law, and the circumstances under which one can sue a third party for interfering with the use of a digital asset.

Deadline for comments is 5 November 2023.