DFSA Introduces Crypto Token Regime to Boost Innovation | Fintech time
Dubai Financial Services Authority (DFSA) has embarked on a “crypto token scheme” in an effort to address anti-money laundering and anti-terrorist financing risks.
The objective of the UAE central bank regime is to foster innovation while meeting regulatory objectives. The DFSA said it wanted to encourage progress in a “measured, accountable and transparent” way.
The DFSA says it has tried to take a balanced approach in developing the scheme and will consider further changes and modifications as the industry evolves. If changes were to occur, he would introduce them in accordance with best practices and standards adopted by international standard setters.
The goal of the plan
The regime attempts to be comprehensive in all areas of the financial sector. The agency explained that it covers anti-money laundering and anti-terrorist financing risks with respect to all activities involving crypto tokens. Covering the trading, clearing, holding or transfer of crypto tokens, the regime also addresses consumer protection, market integrity, custody and financial resources of service providers.
The Dubai-based regulator has defined a “crypto token” as one that is used, or is intended to be used, as a medium of exchange or for payment or investment purposes. The definition excludes investment tokens, any other type of investment, or any specifically excluded token.
The DFSA has also broadened the scope of many current financial services activities. He did this to enable companies in the Dubai International Financial Center (DIFC) to provide products or services related to crypto tokens. These activities include advising, negotiating, arranging, trading and custody.
The Crypto Token Regime is the second phase of the DFSA’s work in this area. In October 2021, a scheme in the DIFC for the ‘Investment token regulation‘ had been put into play.
Ian Johnson, chief executive of the DFSA explained the reason for the new regime. He said: “As a progressive regulator, the DFSA recognizes the growing interest in innovative financial products.
“Our work to develop a comprehensive crypto token regime took into account feedback from a wide range of stakeholders. It aims to strike a balance between encouraging innovation in the DIFC and protecting the consumers of these financial products.
All companies wishing to conduct crypto token-related business in or from the DIFC will need to apply through the DFSA website. These companies must complete a contact form for general inquiries, whether or not they are approved by the DFSA.
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