25 October 2021 – The Dubai Financial Services Authority (DFSA) has launched its regulatory framework for Investment Tokens. The framework reflects the proposals outlined in Consultation Paper 138 issued in March 2021, and forms the first phase of the DFSA’s Digital Assets regime.

The regulatory framework defines an Investment Token as either a Security Token or a Derivative Token. Essentially, these are:

•  a security or derivative in the form of a cryptographically secured digital representation of rights and obligations that is issued, transferred and stored using distributed ledger technology or other similar technology; or
• a cryptographically secured digital representation of rights and obligations that is issued, transferred and stored using DLT or other similar technology and: (i) confers rights and obligations that are substantially similar in nature to those conferred by a security or derivative; or (ii) has a substantially similar purpose or effect to a security or derivative.

The DFSA is drawing up proposals for tokens not covered by the investment tokens regulatory framework. These are expected to cover exchange tokens (also known as cryptocurrencies), utility tokens and certain asset-backed tokens (stablecoins). The DFSA intends to issue a second consultation paper later in Q4.

Re-disseminated by The Asian Banker from Dubai Financial Services Authority