The Dubai Financial Services Authority, the financial regulatory agency of the special economic zone, the Dubai International Financial Centre (DIFC), has launched its regulatory framework for Investment Tokens.
According to the statement, the framework reflects the proposed regulations outlined in Consultation Paper 138 issued in March 2021 and forms the first of two phases of the DFSA’s Digital Assets regime.
The DFSA defines an investment token as either a security token or a derivative token that is a “cryptographically secured digital representation of rights and obligations that is issued, transferred and stored using Distributed Ledger Technology (DLT) or other similar technology.”
Peter Smith Head – Strategy, Policy & Risk DFSA
“Creating an ecosystem for innovative firms to thrive in the UAE is a key priority for both the UAE and Dubai Governments and the DFSA. Our consultation on Investment Tokens enabled us to understand what firms were looking for in a regulatory framework and introduce a regime that is relevant to the market. We look forward to receiving applications from interested firms and contributing to the ongoing growth of future-focused financial services in the DIFC.”
The Investment Tokens regulatory framework applies to persons or entities interested in market, issue, trade, or hold Investment Tokens in or from the Dubai International Financial Centre (DIFC). “It applies as well to Authorised Firms wishing to undertake Financial Services relating to Investment Tokens, such as dealing in, advising on, or arranging transactions relating to, Investment Tokens, or managing discretionary portfolios or collective investment funds investing in Investment Tokens,” according to the statement.
The DFSA is formulating proposals for other tokens not covered by the Investment Tokens regulatory framework. These are expected to cover exchange Tokens (commonly known as cryptocurrencies), Utility Tokens, and certain Asset-backed Tokens (Stablecoins). The DFSA aims to issue a second consultation paper covering these matters in the fourth quarter of this year.
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