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.

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 paper seeks comments on the DFSA's proposals to make several amendments to its policy framework, including proposals in relation to the Crypto Token regime that will result in changes to the DFSA Rulebook.

Deadline for comments is 26 May 2023.

The regime covers not only AML/CFT risks in respect of trading, clearing, holding or transferring crypto tokens, but also addressing risks relating to consumer protection, market integrity, custody and financial resources for service providers.

The DFSA has extended the scope of many current financial services activities, for example, advising, dealing, arranging, trading and custody, to allow firms in the DIFC to be able to provide products and services in relation to crypto tokens.

Firms, whether currently authorised by the DFSA or not, that want to provide financial services in relation to crypto tokens in or from the DIFC will have to obtain a license from the DFSA by first submitting a pre-application via the DFSA website. 

The Guidelines set out cross-sectoral principles and best practices for financial institutions when adopting enabling technologies for the development or offering of innovative products and services. The enabling technologies include: 

• distributed ledger technology;
• application programming interfaces; 
• big data analytics and artificial intelligence; and 
• biometrics; cloud computing.

The Guidelines will apply to all financial institutions that are licensed and supervised by any of the Regulators and that utilise the enabling technologies, irrespective of the financial activities conducted.