DFSA introduces regulatory framework for investment tokens

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Dubai, United Arab Emirates: The Dubai Financial Services Authority (DFSA) today launched its regulatory framework for investment tokens. The framework reflects the proposed regulations outlined in consultation paper 138 released in March 2021 and is the first of two phases of the DFSA’s digital asset regime.

The regulatory framework defines an investment token as a security token or a derivative token. Essentially, these are:

  • a security or derivative in the form of a cryptographically secure digital representation of rights and obligations that is issued, transferred and stored using distributed ledger technology (DLT) or other similar technology; and
  • a cryptographically secure digital representation of rights and obligations that is issued, transferred and stored using DLT or other similar technology and: (i) confers rights and obligations of a substantially similar nature to those conferred by a Security or a Derivative; or (ii) has an object or effect substantially similar to a Security or a Derivative.

The regulatory framework for investment tokens applies to persons or entities interested in marketing, issuing, trading or holding investment tokens in or from the Dubai International Financial Center (DIFC). It also applies to authorized companies wishing to provide financial services related to investment tokens, such as the negotiation, advice or organization of transactions relating to investment tokens, or the management of discretionary portfolios or investment funds. collective investment investing in investment tokens.

The DFSA makes proposals for other tokens not covered by the regulatory framework for investment tokens. These should cover exchange tokens (also called cryptocurrencies), utility tokens, and some asset-backed tokens (Stablecoins). The DFSA intends to release a second consultation paper covering these issues later in the fourth quarter.

Peter Smith, Managing Director, Head of Strategy, Policy and Risk at DFSA, said: “Creating an ecosystem for innovative businesses to thrive in the UAE is a key priority for the governments of the UAE and the United Arab Emirates. Dubai, as well as for the DFSA. Our investment token consultation allowed us to understand what companies are looking for in a regulatory framework and to introduce a market-friendly regime. We look forward to receiving applications from interested companies and contributing to the continued growth of forward-looking financial services within DIFC.

-Ends-

For more information, please contact:
Business communication
Dubai Financial Services Authority
Level 13, The Door, West Wing
Dubai, United Arab Emirates
Phone: +971 (0) 4 362 1613
Email: [email protected]
www.dfsa.ae

About the Dubai Financial Services Authority (DFSA)

The Dubai Financial Services Authority (DFSA) is the independent regulator of financial services conducted in and from the Dubai International Financial Center (DIFC), a specially designed financial free zone in Dubai. DFSA’s regulatory mandate covers asset management, banking and credit services, securities, collective investment funds, custody and trust services, commodity futures, Islamic finance , insurance, crowdfunding platforms, monetary services, an international stock exchange and an international commodity derivatives exchange. In addition to regulating financial and ancillary services, the DFSA is responsible for administering anti-money laundering (AML) and anti-terrorist financing (CFT) legislation that applies to regulated businesses. and DIFC designated non-financial businesses and professions. Please see the DFSA website for more information.

Peter Smith, Managing Director responsible for Strategy, Policy and Risk, joined DFSA in June 2012. He is responsible for DFSA’s strategic planning, its annual business planning cycle and engagement with external organizations on strategic issues; the development and maintenance of the policy framework of the DFSA; and the organizational risk framework, including the risk-based approach to regulation.

Peter is Chairman of the UAE National Advisory Board of the Chartered Institute for Securities and Investment and a member of the Capital Markets Advisory Board of the UAE Securities and Commodities Authority. Internationally, Peter is a member of the Policy Development Committee of the International Association of Insurance Supervisors. He is a member of the governing body of the Global Financial Innovation Network (GFIN), which brings together like-minded regulators to work on innovation in financial services.

© Press release 2021


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