The Dubai Financial Services Authority (DFSA) has announced amendments to its cryptocurrency token regime to advance the regulatory framework for tokens within the special economic zone in the UAE.
The DFSA revised its crypto token regime to incorporate changes proposed in Consultation Paper 153, published in January 2024. The amendments address key areas such as the regulation of funds investing in crypto tokens and the recognition process for these tokens.
The amendments impact the ability of external and foreign funds to offer units in recognized crypto tokens. Previously, the DFSA restricted fund activities involving crypto tokens. However, feedback from fund and asset managers indicated that the existing regulations were too stringent. The DFSA noted in its consultation paper:
“They expressed the view that the current regulatory approach was too stringent, especially the limitations on External Funds and Foreign Funds investing in Crypto Tokens and, for some, the restriction on investing in Recognised Crypto Tokens only.”
Additionally, the changes now allow domestic qualified investor funds to invest in unrecognized tokens, provided the exposure does not exceed 10% of the fund’s gross asset value (GAV). Until now, the DFSA had recognized only five crypto tokens: Bitcoin (BTC), Ether (ETH), Litecoin (LTC), XRP (XRP), and Toncoin (TON).
Previously, the application fee for token recognition was $10,000 per token, which many firms considered excessively high, particularly for those seeking recognition for multiple tokens. In response to this feedback, the DFSA reduced the fee to $5,000 and introduced additional recognition criteria for stablecoins, which are crypto tokens pegged to fiat currencies.
The DFSA said that these changes do not represent a more lenient regulatory stance. Instead, they provide flexibility to recognize fiat-pegged crypto tokens issued in jurisdictions with comparable regulation.
DFSA Chief Executive Ian Johnston said the regulator aims to “foster innovation in a responsible and transparent manner” while meeting regulatory objectives. He noted that the DFSA has engaged with over 100 firms in the past two years, gaining insights into market dynamics and regulatory needs.
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- Source: https://financefeeds.com/dubai-slashes-crypto-token-recognition-fees-to-5000/
