Dubai Financial Services Authority Releases Regulatory Framework for “Investment Tokens”

The Dubai Financial Services Authority (DFSA) has announced its regulatory framework for “Investment Tokens,” which can be securities or derivatives. The agency defines investment tokens as cryptographically secured tokens that represent rights and obligations similar to those conferred by a security or derivative or has a similar purpose and are issued, transferred, and stored using Distributed Ledger Technology (DLT). These tokens are different from exchange tokens or cryptos, for which the DFSA is planning to roll out a framework for including utility tokens and asset-backed tokens or stablecoins. The agency will issue a consultation paper on this in the fourth quarter. The framework for investment tokens, not detailed in the announcement is based on the consultation paper issued in March, applies to firms that want to issue or trade investment tokens in the International Financial Centre of Dubai and accredited firms that wish to offer financial services related to these tokens. “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,” said Peter Smith, Managing Director, Head of Strategy, Policy, and Risk at the DFSA. This consultation has enabled the agency to introduce a regime relevant to the market, he said, adding, they are looking forward to receiving applications from interested firms and “contributing to the ongoing growth of future-focused financial services in the DIFC.”