Dubai's Financial Watchdog Plans to Regulate Cryptocurrency

The Dubai Financial Services Authority (DFSA), which oversees businesses operating from tax-free Dubai International Financial Centre (DIFC), revealed its plans to brings cryptocurrency regulatory frameworks in a business plan brochure for 2021 to 2022.

“We will build upon recent achievements in this space over the business planning period through developing a regulatory regime for digital assets (such as tokenized securities and Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term), having already implemented regulations supporting various innovative business models,” the DFSA noted.

Published on Monday, the business plan did not specify any details or deadline for introducing the regulations.

The DFSA license is gaining a lot of traction among the financial services provider and many globally established players gained the license in the past few years to manage their Middle East operations.

Though the economic zone was not yet popular with crypto companies, Ripple named the jurisdiction as its possible base if the company had to take its operations outside the United States.

The Abu Dhabi Global Market regulator adopted crypto regulatory guidance in 2018 and recognized several crypto companies established in the region.

“We intend to take a regulatory approach that facilitates innovation while requiring strict adherence to the DFSA’s licensing, prudential and conduct requirements,” the business plan noted.

Becoming a Safe Haven for Crypto

According to local news agency The National, the UAE regulator is going to publish two consultation papers in the first and second quarter of 2021, seeking feedback on the proposed crypto regulations.

“We will look to regulate a wide range of digital assets, including security tokens, utility tokens, the various types of Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term (or payment) tokens, such as cryptocurrencies [and] the firms that provide relevant services in these markets,” Peter Smith, DFSA’s Head of Strategy, Policy, and Risk, told the publication.

“We will regulate these markets in a proportionate and thoughtful manner, drawing on best practices across the globe.”