The Dubai Financial Services Authority (DFSA) has disclosed its plans to create a regulatory framework for cryptocurrencies. The announcement was part of the 2021-2022 business agenda released this week.
The newspapers will be released in the first half of 2021
According to the guard dog, which regulates the Dubai International Financial Center (DIFC), the upcoming crypto framework aims to extend the existing rules. It includes the regulation of crypto issuers and trading platforms.
The document, signed by DFSA Chairman Saeb Eigner, reads:
We will build on recent achievements in this area during the business planning period by developing a regulatory regime for digital assets (such as tokenized securities and cryptocurrencies), having already implemented regulations that support several innovative business models.
The financial watchdog explains that the expansion of such crypto regulation is part of the digital transformation of the UAE’s national innovation strategy.
The regulator also added that the regulatory approach is expected to facilitate innovation “while requiring strict adherence to the licensing, prudential and behavioral requirements of the DFSA.”
Per The national, a local media outlet, the DFSA expects to publish two consultation papers with the aim of gathering feedback. As a result, the watchdog will release both documents in the first half of 2021. The 2021-2022 business plan states:
The DFSA is committed to remaining ‘open for business’ with regard to innovation in the financial services industry and we continue to explore how our regulatory regime can adapt to new and innovative business models.
DFSA’s current position on cryptocurrencies
In 2017, the DFSA referred to the crypto industry in the statement entitled “General Investor Statement on Cryptocurrencies.” At the time, the authority was outspoken in its cautious stance on cryptos, taking into account elements such as initial coin offerings (ICOs) “high-risk investments”.
The watchdog wrote in its 2017 statement:
Accordingly, the DFSA encourages potential investors to exercise caution and due diligence to understand the risks involved before interacting with any person promoting such offers in the DIFC or making any financial contribution to such offers.
However, the Dubai authorities have been to spend licenses through the Dubai Multi Commodities Center (DMCC) to companies trading cryptocurrencies since 2017. The DMCC Free Zone is the largest and fastest growing free economic zone in the UAE.
What do you think of the upcoming crypto regulation in Dubai? Let us know in the comments below.
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