The Dubai Financial Services Authority (DFSA) has released a public discussion paper (16 pages, 505KB PDF), suggesting revisions to the crypto asset regulatory structure within the Dubai International Financial Centre (DIFC).
The planned adjustments will require companies to independently evaluate and announce the appropriateness of crypto assets beyond those pegged to fiat currencies. This will replace the DFSA’s pre-existing official list of approved tokens. Furthermore, limitations on investment funds engaging with crypto assets, both directly and through investment vehicles, are slated for removal. Restrictions on percentage allocations and token types within net asset calculations for qualified professional investors are also proposed to be lifted.
The DFSA will maintain regulatory control over crypto assets linked to government-issued currencies, promising a forthcoming policy statement clarifying their regulatory perspective. The current list of recognized international jurisdictions will also be eliminated to broaden market accessibility for crypto assets.
Jessica White, a financial regulations specialist at Pinsent Masons in the Middle East, commented: “These recommendations demonstrate the DFSA’s ongoing dedication to converging with international regulatory trends, while simultaneously providing businesses with increased flexibility to encourage responsible innovation and advancement of the market within the DIFC.”
White further advises that companies affected by these impending changes should scrutinize the proposed monthly reporting mandates via the DFSA’s electronic portal, as well as remain mindful of the updated sanctions for regulatory breaches.
This announcement trails closely behind the Financial Services Regulatory Authority in Abu Dhabi Global Market’s recent publication of updated regulations relating to digital assets backed by fiat currencies.
Clients and participants operating within the DIFC jurisdiction should reassess their internal procedures for evaluating digital assets to adequately prepare for the upcoming firm-led suitability mandates. They should also analyze their reporting infrastructures to align with the envisioned monthly compliance requirements. Moreover, White suggests evaluating the consequences stemming from modifications to both jurisdictional scope and fund-related guidelines.
Feedback on the proposed changes is welcomed by the DFSA and can be submitted until the consultation period ends on October 31st.
“The potential changes support the DFSA’s overall aim to foster a secure, open, and forward-thinking environment for activities involving digital assets. In doing so, they further support Dubai and the UAE’s larger strategic goals for the digital economic landscape,” White concluded.