The Dubai Financial Services Authority (DFSA) has revised its cryptocurrency token regulations to enhance and modernize the framework within Dubai’s special economic zone.
The DFSA, an independent regulator in the UAE, oversees entities registered in the Dubai International Financial Centre (DIFC), one of the country’s special economic zones.
On June 3, the DFSA announced updates to its crypto token regime, reflecting changes from its Consultation Paper 153 published in January 2024. These updates address key areas, including fund investments in crypto tokens and the recognition process for these tokens.
External and Domestic Funds Investing in Crypto Tokens
The amendments now allow both external and domestic funds to invest in recognized crypto tokens. Previously, the DFSA had strict limitations on fund activities involving crypto tokens.
In their consultation paper, the DFSA noted that fund and asset managers had described the existing rules as overly restrictive, particularly the limitations on external and foreign funds investing in crypto tokens, and the restriction to recognized tokens only.
Recognition of Crypto Tokens
Under the previous regime, the DFSA only recognized five crypto tokens: Bitcoin (BTC), Ether (ETH), Litecoin (LTC), XRP (XRP), and Toncoin (TON). The new rules also permit domestic qualified investor funds to invest in unrecognized tokens, provided the exposure does not exceed 10% of the fund’s gross asset value (GAV).
Token Recognition Fees and Stablecoin Criteria
The application fee for token recognition was reduced from $10,000 to $5,000 following feedback that the original fee was excessively high, particularly for firms seeking recognition for multiple tokens. The DFSA also introduced new criteria for recognizing stablecoins, which are crypto tokens pegged to fiat currencies.
The DFSA clarified that these changes do not represent a more lenient stance but are intended to provide flexibility in recognizing fiat-pegged crypto tokens issued in other jurisdictions with comparable regulations.
Summary Review: The DFSA‘s updated regulations mark a significant step in advancing the regulatory framework for crypto tokens within Dubai’s special economic zone. By easing restrictions and lowering fees, the DFSA aims to create a more flexible and attractive environment for funds and investors, while maintaining robust oversight and ensuring compliance with international standards.
Disclaimer: Remember that nothing in this article and everything under the responsibility of Web30 News should be interpreted as financial advice. The information provided is for entertainment and educational purposes only. Investing in cryptocurrency involves inherent risks and potential investors should be aware that capital is at risk and returns are never guaranteed. It is imperative that you conduct thorough research and consult with a qualified financial advisor before making any investment decision.
