Dubai regulator announces new regulations for investment tokens

The Dubai Financial Services Authority (DFSA) has established a regulatory framework for investment tokens as part of its efforts to stimulate the digital financial and technological environment while also meeting market players' demands and requirements.

The DFSA is an independent regulatory body in Dubai that is in charge of monitoring and regulating financial services companies wanting to operate there. It also licenses and regulates their products and services.

According to a report by Emirates news agency WAM, the DFSA's regulatory framework defines investment tokens as either "a Security Token or Derivative Token."

The report notes that the creation of a new regulatory structure is the first step in DFSA's Digital Assets Regime, which reflects the suggestions made in Consultation Paper 138 published in March 2021. The consultation paper sought public input on DFSA's plans for regulating Security Tokens. 

As reported by Cointelegraph in March, the financial regulator in Dubai called on members of the public to submit comments on its proposed rules for cryptocurrencies considered to be security tokens.

The investment token framework is designed to safeguard investors and provide legal certainty for market operators. 

Related: UAE regulators approve crypto trading in Dubai free zone

It specifies the sort of investment tokens that are permitted and which may be listed on a Digital Asset Exchange in the Dubai International Financial Centre, as well as other pertinent information.

The DFSA is also working on plans for unlisted securities not covered by the investment tokens regulatory framework. These are anticipated to include cryptocurrencies, utility tokens, and certain stablecoins. The DFSA is expected to publish a follow-up consultation paper in the fourth quarter of this year.