Dubai Financial Services Authority (DFSA) is the regulatory arm of the Dubai International Financial Centre (DIFC), they have released a consultation paper with an outline of a regulatory arrangement for cryptocurrencies.
Consultation Paper 143 “seeks public comment on our proposals for a regulatory regime for persons wishing to provide financial services activities” and “the development of these proposals was prompted by the need to introduce appropriate investor protection requirements in this area, while also facilitating the development of this market in a responsible and prudent manner.”
After a public consultation phase, lasting until May 6th, 2022, the DFSA will make changes to the draft legislation as they see possible. The final version of the regulations will be posted on the DFSA’s official website.
The Excluded And The Prohibited
The current consultation paper only covers crypto tokens distinct from investment tokens, which are covered in Consultation Paper 138 – Regulation Of Security Tokens.
CP143 states that “there are certain tokens which will not be brought into the definition of a crypto token and, thus, will not fall within the scope of these regulatory proposals”. The DFSA is proposing to exclude three types of tokens from their regime;
- Non-Fungible Tokens (NFTs)
- Utility Tokens (Token that has a specific use case within a closed ecosystem)
- Central Bank Digital Currencies (CBDCs)
Along with the restricted tokens, there are several prohibited tokens. The DFSA is proposing to “ban these tokens and introduce a prohibition that no public offer or promotion”. These include;
- Privacy Tokens and Devices
- Algorithmic Tokens
