According to the Dubai Financial Services Authority (DFSA) which is the chief regulator of the Dubai International financial centre (DIFC), a new regulatory framework for cryptos is about to be unveiled.
New framework expands on existing rules
According to the watchdog, the upcoming framework aims to expand on the existing rules and includes the regulation of crypto issuers and trading platforms. The watchdog’s chairman Saeb Eighner signed a document that reads in part;
“We will build upon recent achievements in this space over the business planning period through developing a regulatory regime for digital assets (such as tokenized securities and crypto-currencies), having already implemented regulations supporting various innovative business models”.
According to the financial watchdog, the new regulatory framework is an upgrade on existing regulatory Infrastructure. The financial watchdog went on to explain that the new addition to the existing digital infrastructure is part of the UAE’s National Innovation Strategy’s digital transformation. The regulator added that the new changes would facilitate innovation while requiring strict adherence to the DFSA’s licensing, prudential and conduct requirements.
Two consultation papers early this year
According to local media outlet, The National, the DFSA expects to put out two consultation papers with the purpose of gathering feedback. It is expected that the regulatory body will release both documents in the first half of 2021. 2021 appears to be the year that Dubai regulators finally come around to the idea of cryptocurrency. The tone was very different back in 2017 when the DFSA was very vocal in its stance that crypto posed many risks to citizens. The regulatory body considered crypto related offerings such as Initial Coin Offerings (ICOs) “high-risk investments.” Investors were, therefore, urged to exercise caution every time they dealt with initial coin offerings.
Things have been progressively changing though, with Dubai authorities issuing licenses through the Dubai Multi Commodities Centre (DMCC) to firms trading cryptocurrencies since 2017. The DMCC Free Zone is the largest and fastest growing economic zone in the UAE. It is widely expected than more and more licenses will be issued as Dubai-based crypto operators gain more regulatory clarity.
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