Monday, October 25, 2021 – 1:20 pm
DUBAI, 25th October / WAM/ The Dubai Financial Services Authority today launched the regulatory framework on digital financial assets for the purpose of investment, which is based on the proposals contained in Advisory Paper No. 138 issued by the Authority in March 2021 and is the first phase of the DFSA’s digital assets system.
The regulatory framework defines a digital financial asset for investment purpose as either a digital financial asset or another digital financial derivative.
These mainly include securities and financial derivatives in a crypto-secured digital form to represent the rights and obligations that are issued, transferred and stored using Distributed Ledger Technology (DLT) or similar technologies or any crypto-secured digital body to represent the rights and obligations that are issued, transferred and stored using DLT technology. Distributed Ledger/DLT/ or similar technologies and create rights and obligations substantially similar in nature to those arising from securities or financial derivatives or with a purpose or effect substantially similar to securities and financial derivatives.
The regulatory framework for digital financial assets for the purpose of investment applies to persons interested in marketing, issuing, trading or owning digital financial assets for the purpose of investing in or from the Dubai International Financial Center. The framework also applies to licensed companies wishing to provide financial services related to digital financial assets for the purpose of investment such as trading or Advising or arranging transactions related to digital financial assets for the purpose of investment or managing discretionary portfolios or collective investment funds that invest in digital financial assets for the purpose of investment.
The authority is also in the process of preparing proposals for encrypted tokens not covered under the regulatory framework for digital financial assets for the purpose of investment, such as exchangeable crypto tokens (also known as cryptocurrencies), utility tokens, and asset-backed crypto tokens (stable coins). The authority plans to issue a second advisory paper in the last quarter of the year.
Peter Smith, Head of Policy, Strategy and Risk Department at the DFSA, said that creating a catalytic system for the prosperity of innovative companies in the UAE is a major priority for the UAE government, the Government of Dubai and the Dubai Financial Services Authority, and our advisory paper on digital financial assets for the purpose of investment enabled us to understand what you want companies from the regulatory framework and provide a market-friendly system and we look forward to receiving applications from interested companies to contribute to the continued growth of future-focused financial services in the DIFC.
Wam / Mubarak Khamis / Dina Omar