The consultation seeks public comment on proposals for amendments to the regulatory regime for persons wishing to provide financial services activities in respect of crypto tokens. The development of these proposals is based on the DFSA's "supervisory experience, recent market events and recommendations from international standard setters."

The proposals in the consultation relate only to crypto tokens and do  not cover rgulation of investment tokens. 

The deadline for comments is 4 March 2024.

The paper seeks comments on the DFSA's proposals to make several amendments to its policy framework, including proposals in relation to the Crypto Token regime that will result in changes to the DFSA Rulebook.

Deadline for comments is 26 May 2023.

The regime covers not only AML/CFT risks in respect of trading, clearing, holding or transferring crypto tokens, but also addressing risks relating to consumer protection, market integrity, custody and financial resources for service providers.

The DFSA has extended the scope of many current financial services activities, for example, advising, dealing, arranging, trading and custody, to allow firms in the DIFC to be able to provide products and services in relation to crypto tokens.

Firms, whether currently authorised by the DFSA or not, that want to provide financial services in relation to crypto tokens in or from the DIFC will have to obtain a license from the DFSA by first submitting a pre-application via the DFSA website. 

The Guidelines set out cross-sectoral principles and best practices for financial institutions when adopting enabling technologies for the development or offering of innovative products and services. The enabling technologies include: 

• distributed ledger technology;
• application programming interfaces; 
• big data analytics and artificial intelligence; and 
• biometrics; cloud computing.

The Guidelines will apply to all financial institutions that are licensed and supervised by any of the Regulators and that utilise the enabling technologies, irrespective of the financial activities conducted.

The DFSA proposed updating its regime to enable DLT-based activities.

Key changes proposed include:

• allowing facilities that trade security tokens to have direct access members, including retail clients;
• enhanced systems and controls requirements to address risks associated with the use of DLT or similar technology;
• enhanced disclosure in prospectuses; and
• enhanced requirements for those providing custody of Digital Wallets.