The Dubai Financial Services Authority (DFSA) has announced plans to implement new regulations for cryptocurrencies in its business plan brochure for the years 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 crypto-currencies), having already implemented regulations supporting various innovative business models,” the financial watchdog said.
“In doing so, we intend to take a regulatory approach that facilitates innovation while requiring strict adherence to the DFSA’s licensing, prudential and conduct requirements,” according to the DFSA which regulates the Dubai International Financial Centre (DIFC).
While the shape of the designed regulations is not known at this point, the past few years have brought a number of steps by the watchdog which signalled its highly cautious stance on cryptocurrencies. In September 2017, the regulator issued its General Investor Statement on Cryptocurrencies in which the DFSA said it viewed Initial Coin Offerings (ICOs) as high risk investments.
“They have their own unique risks, which may not be easy to identify or understand; such risks may increase where offerings are made on a cross-border basis. These offerings should be regarded as high-risk investments,” according to the watchdog.
“The DFSA would like to make it clear that it does not currently regulate these types of product offerings or license firms” in the DIFC “to undertake such activities,” the statement said. “Accordingly, before engaging with any persons promoting such offerings in the DIFC, or making any financial contribution toward such offerings, the DFSA urges potential investors to exercise caution and undertake due diligence to understand the risks involved.”
With close to 2,600 registered companies and about 25,600 employees, the DIFC claims to be the leading financial hub in the Middle East, Africa and South Asia region.