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Dubai is set to regulate investment tokens

Nov 09, 2021

‘Good news for industry’ as stated by the Binance Middle East and North Africa chief. The DFSA has introduced new regulatory framework for investment tokens which regulate security and derivative tokens.

According to the interview of Omar Rahim, Binance’s Middle East and North America director, held by the ‘Arabian Business’ media outlet, “There have been a number of ‘false starts’ in the security token field over the last four years, so this kind of progress is very welcome indeed. We believe security tokens have the potential to grow the crypto space 100 times, and as such we will be monitoring the landscape with interest.”

However, utility, exchange and fiat-backed tokens (or so-called stablecoins) are not yet regulated in Dubai. In a statement, released by the DFSA, it said that they are investigating the possibilities to formulate proposals for other types of tokens and are planning to release regulatory framework for the above-mentioned tokens later this year.

“This builds on the work that is ongoing in the crypto regulation space in the UAE as a whole,” Binance MENA chief continued. “This is good news for the industry. The UAE seems to be taking a lead in regulating this fast-moving space.”

To be more precise, the regulatory framework issued by the DFSA applies to persons and/or legal entities interested in marketing, issuing, trading or holding investment tokens in and/or from the Dubai International Financial Centre (DIFC). It applies as well to authorized firms wishing to undertake financial services relating to investment tokens, such as dealing in, advising on, or arranging transactions relating to, investment tokens, or managing discretionary portfolios or collective investment funds investing in investment tokens.

Peter Smith, managing director, head of Strategy, Policy and Risk at the DFSA said: “Creating an ecosystem for innovative firms to thrive in the UAE is a key priority for both the UAE and Dubai governments, and the DFSA. Our consultation on investment tokens enabled us to understand what firms were looking for in a regulatory framework and introduce a regime that is relevant to the market. We look forward to receiving applications from interested firms and contributing to the ongoing growth of future-focused financial services in the DIFC.”

Simon Hudson, founder and CEO of Cheeze Inc., told Arabian Business media outlet the following: "Regulating tokens in my opinion is a step in the right direction. Blockchain technology is still very early but its huge adoption and daily trade volume shows that it is here to stay. By adding an underlying regulation will further help blockchain tokens move into the mainstream. Investing in a token that backs an established business or growing start-up is a new way to be part of the company's success and regulating this gives confidence for investors looking to enter the space. In a space where everyone is still learning I think it is important to have structure and regulation to ensure that people have security and reassurance. I believe the move will see a new wave of people joining the space."

Our editorial office continues to keep an eye on the cryptocurrency regulations all across the globe and welcomes any new regulations implied by the governments. Furthermore, our team of professionals has started working on creating proposal for those interested in working under Dubai jurisdiction under the above-mentioned freshly-made regulatory framework. Moreover, we have a variety of decisions for those willing to try themselves in cryptocurrency business affairs and we will be delighted to offer our services to every person interested. For now, the so-called ‘hot-potato’ appears to by Lithuanian Crypto License, which is offered by Offshorelicense – feel free to contact us in case of interest!

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