Regulation
DFSA revises its regulations, strengthening fund flexibility
The Dubai Financial Services Authority (DFSA) has updated its cryptocurrency token regime to improve and streamline the regulation of tokens within its special economic zone. The changes allow external and domestic funds to invest in recognized crypto tokens, addressing previous restrictions deemed too strict by the fund and asset managers.
The DFSA reduced the token recognition fee from $10,000 to $5,000 and introduced additional criteria for stablecoins, ensuring flexibility while maintaining strong regulatory standards.
Reason for implementation
The revisions arise from comments on Consultation Paper 153, released in January 2024. Fund managers highlighted that previous regulations were too restrictive, particularly regarding external and foreign funds investing in crypto tokens.
By relaxing these rules, the DFSA aims to drive innovation responsibly, balancing regulatory objectives with the need for market adaptability.
Impact on investors
With these changes, qualified domestic investors are allowed to invest in unrecognized cryptotokens, but this investment must not exceed 10% of the fund’s net asset value.
These changes can be attributed to the continued steps taken by the DFSA to strengthen the legal infrastructure of regulation and investment climate development.
Furthermore, the improvements made by the DFSA are expected to lead to more investment activities in the Dubai International Financial Center and improved innovation and compliance with regulatory requirements.
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