DFSA Promotes Tokenization With New Regulatory Initiative

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The Dubai Financial Services Authority has launched the tokenization regulatory sandbox to support firms developing tokenized investment products within the Dubai International Financial Centre.

Crypto Tokens Excluded

The Dubai Financial Services Authority (DFSA) has announced the launch of its Tokenisation Regulatory Sandbox, a new initiative designed to support firms exploring tokenized investment products and services within the Dubai International Financial Centre (DIFC). This move underscores the DFSA’s commitment to fostering innovation while maintaining robust regulatory standards.

According to the regulator, the sandbox will operate in two phases starting the Expression of Interest period that allows firms to signal their intent. This will be followed by an Innovation Testing Licence (ITL) Tokenisation Cohort, where selected firms can test their products in a controlled regulatory environment.

The DFSA is seeking applications from firms involved in various aspects of tokenization, including the issuance, trading, and settlement of tokenized investments such as equities, bonds, and fund units. Existing authorized firms looking to expand into tokenization can also apply. The DFSA however revealed that crypto and the so-called fiat crypto tokens are excluded from the scope of this initiative.

Interested firms can submit their applications for the Expression of Interest phase between March 17, 2025, and April 24, 2025, with no associated fees. Successful applicants will then be invited to join the ITL Tokenisation Cohort.

Some of the benefits of participating in the ITL cohort include receiving regulatory guidance, conducting controlled testing in a live market environment, and the potential to transition to a full DFSA license. This sandbox aims to provide clarity on tokenization rules within the DIFC and facilitate the development of innovative financial products.

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