Dubai financial regulator opens a 30-day public consultation on security token

The Dubai Financial Services Authority (DFSA) is seeking feedback from the public on security token regulations and have enacted a 30-day window for the public to comment.

This is according to a DFSA press release issued on Monday, in which the announcement confirms their current effort to create a standardized framework for cryptocurrency regulations in the city.

The public comments phase of the process will be open for 30 days and is part of the modalities for instituting the DFSA’s “Framework for Regulating Security Tokens.”

Commenting on the need for clarity on decentralized ledger technology, DFSA Chief Executive Officer 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.”

Dubai has lately become an important hub for crypto and blockchain technology in the region and to strengthen the position the DFSA is looking to provide regulatory clarity across three major areas of concern.

The first involves a regulated framework for offering and trading digital securities to investors inclusive of retail buyers.

Quality control protocols are a another priority, aimed to protect retail investors with security token issuers. The latter will need to comply with strict disclosure requirements in their prospectuses.

Thirdly, the DFSA is getting their heads around the actual support services that are associated with security tokens. Such services include asset custody providers and advisory services.

According to the DFSA Chief Executive Officer, the DSA goal is to find a balance between regulatory oversight and promoting innovation in the digital asset space. With the feedback gathered during the 30-day window, the DFSA intends to work hard towards regulatory guidelines and laws for utility tokens and “exchange tokens” to be ready before the end of the year

“Our proposals promote and facilitate innovation, while also protecting consumers, addressing market integrity and mitigating ML/FT and other risks. We have drawn on the experience of other regulators who have taken cautious steps in this rapidly developing area, while addressing DIFC specific needs. We look forward to receiving public comments on these proposals,” Stirewalt said.

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