The Dubai Financial Services Authority (DFSA) has presented its plans to create a regulatory framework for cryptocurrencies. The announcement was part of the 2021-2022 business agenda that was released this week.
The papers will be published in the first half of 2021
According to the watchdog that regulates the Dubai International Financial Center (DIFC), the upcoming crypto framework aims to expand 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 system for digital assets (such as token stocks and cryptocurrencies) that has already implemented regulations to support various innovative business models.
The Financial Watchdog explains that expanding such crypto-regulation is part of the digital transformation of the UAE’s National Innovation Strategy.
The regulator added that the regulatory approach is intended to encourage innovation “while strictly adhering to the DFSA’s licensing, oversight and behavioral requirements”.
According to The National, a local media company, the DFSA is expecting two consultation papers to be released to get feedback. As a result, the watchdog will release both documents in the first half of 2021. The 2021-2022 business plan states:
DFSA is committed to remaining “open to business” with respect to innovation in the financial services sector, and we continue to investigate how our regulatory system can accommodate new and innovative business models.
The current position of the DFSA on cryptocurrencies
In 2017, the DFSA referred to the crypto industry in a declaration entitled “General Investor Declaration on Cryptocurrencies”. At that time, the agency was cautious about cryptos and considered elements such as ICOs (Initial Coin Offerings) as “high-risk investments”.
The watchdog wrote in its 2017 statement:
Accordingly, the DFSA urges potential investors to exercise caution and to exercise due diligence in order to understand the associated risks before contacting any person who advertises such offers in the DIFC or makes a financial contribution to such offers .
However, the Dubai authorities have been granting licenses to cryptocurrency trading companies through the Dubai Multi Commodities Center (DMCC) since 2017. The DMCC free trade area is the largest and fastest growing free trade area 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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