The Dubai Financial Services Authority, or DFSA, is continuing its efforts to create a standardized framework for cryptocurrency regulations in the megacity.
According to a DFSA press release issued on Monday, Dubai’s financial regulator has called on members of the public to submit comments on its proposed regulations for cryptos deemed to be security tokens.
The public comments phase of the process will last for 30 days and is part of the modalities for instituting the DFSA’s “Framework for Regulating Security Tokens.”
Dubai’s security token infrastructure focuses on providing regulatory clarity across three major areas of concern. The first part deals with creating a regulated framework for offering and trading digital securities to investors including retail buyers.
The DFSA is prioritizing quality control protocols to protect retail investors with security token issuers complying with strict disclosure requirements in their prospectuses.
The third area of concern for the DFSA focuses on the support services associated with security tokens. These include asset custody providers and advisory services.
Commenting on the need for clear cut regulations for security tokens based on decentralized ledger technology, DFSA chief executive Bryan Stirewalt said:
“The proposal for regulation of security tokens is a key milestone in paving a clear and certain path for those issuers who wish to raise capital in or from the DIFC using DLT and similar technology. And for those firms who intend to be involved in this market, by conducting or providing financial services.”
According to Stirewalt, the DFSA’s goal is to strike a balance between regulatory oversight and promoting innovation in the digital asset space. The regulatory agency plans to publish laws for utility tokens and “exchange tokens” later in 2021.
Indeed, the city has become a hub for crypto and blockchain technology in the Gulf region. Back in February, Kiklabb, a state-owned licensing company, began accepting cryptocurrency payments.
In July 2020, the United Arab Emirates government debuted a blockchain-based Know Your Customer platform.