Dubai Launches New Crypto Framework in DIFC

Dubai has implemented major updates to its Crypto Token framework in the DIFC, shifting responsibility for token suitability assessments from the regulator to authorised firms and removing the list of Recognised Crypto Tokens.

On January 12, 2026, the Dubai Financial Services Authority (DFSA) brought into force its updated regulatory framework for Crypto Tokens in the Dubai International Financial Centre (DIFC). The revised regime strengthens regulatory oversight, enhances market integrity, and supports the development of a safe, transparent, and well-regulated digital assets environment within the DIFC.

The updated framework follows a public consultation conducted in October 2025 and represents a substantial evolution of the DFSA’s Crypto Token regime, which was first introduced in 2022. Over the past three years, the regulator has closely monitored developments in global digital asset markets and engaged with industry participants and international regulatory counterparts to ensure its rules remain proportionate, globally aligned, and supportive of responsible innovation.

See also: Digital Assets in the UAE: Evolving Legal Frameworks

Shift to firm-led crypto token suitability assessments

The most significant reform under the updated framework is the transition from a DFSA-led suitability assessment model to a firm-led approach. Under the new rules, firms providing financial services involving Crypto Tokens are now directly responsible for determining, on a reasoned and documented basis, whether each Crypto Token they engage with meets the DFSA’s suitability criteria.

As part of this shift, the DFSA will no longer maintain or publish a list of Recognised Crypto Tokens. Instead, responsibility for assessing token suitability now rests squarely with authorised firms. This change reflects the DFSA’s move away from a prescriptive regulatory model toward one that places greater accountability on market participants, while retaining strong supervisory oversight.

Firms must establish structured internal frameworks for assessing suitability and ensure that decisions are supported by objective evidence. While firms may take into account assessments conducted by other market participants, they remain fully responsible for their own determinations and must be able to demonstrate compliance to the DFSA upon request.

Enhanced investor protection and conduct requirements

The transition to firm-led assessments is accompanied by strengthened investor-protection measures and refined conduct and operational requirements. These changes are designed to ensure that increased flexibility for firms is matched by higher standards of governance, transparency, and accountability.

Firms must implement enhanced controls to manage conflicts of interest, market abuse risks, and operational vulnerabilities associated with Crypto Tokens. Disclosure obligations have been refined to ensure clients receive clear, fair, and not misleading information regarding the risks associated with digital assets, including volatility, liquidity constraints, technological risks, and regulatory uncertainty.

The revised framework also introduces proportionate reporting requirements that better reflect the current structure and maturity of global crypto markets. These obligations are intended to improve supervisory visibility while avoiding unnecessary regulatory burden.

Supervisory guidelines on assessing crypto token suitability

To support implementation of the new regime, the DFSA has issued detailed supervisory guidelines setting out its expectations for how firms should conduct suitability assessments. The assessment is context-specific, meaning that a Crypto Token may be suitable for certain activities, products, or client categories but not for others.

Key areas firms are expected to evaluate include the characteristics and governance of the token, its regulatory status in other jurisdictions, market size and liquidity, technological resilience, and compatibility with DFSA regulatory requirements, including anti-money laundering and counter-terrorist financing obligations.

The DFSA has highlighted both positive and negative indicators within these areas. Tokens with genuine use cases, transparent governance structures, diversified ownership, and the ability to monitor activity on-chain are viewed more favourably. Conversely, tokens that are purely speculative, lack real-world utility, or exhibit high concentration of holdings among founders or affiliates raise concerns due to heightened volatility and market-manipulation risks.

Alignment with international regulatory standards

The updated framework reflects the DFSA’s intention to remain aligned with evolving international best practice. Global regulators have increasingly emphasised the need for robust oversight of crypto-asset activities that resemble traditional financial services, particularly in response to market failures, governance breakdowns, and weaknesses in client asset protection observed in recent years.

By embedding responsibility for suitability assessments within firms’ governance and risk-management frameworks, the DFSA aims to ensure that oversight is responsive to market realities while reducing reliance on regulator-driven pre-approval models. This approach seeks to minimise regulatory arbitrage while preserving the DIFC’s competitiveness as a digital finance hub.

Industry impact and regulatory certainty

For firms currently operating in the DIFC, the updated rules require a reassessment of internal compliance arrangements, governance structures, and documentation processes. Suitability assessments must be treated as an ongoing obligation rather than a one-off exercise, with firms expected to monitor changes in token governance, market conditions, and regulatory status over time.

For prospective market entrants, the revised framework provides a clearer and more predictable pathway for conducting Crypto Token activities within the DIFC. Covered activities include trading, fund and asset management, custody, advisory services, and other related financial services involving digital assets.

The regime reinforces the DIFC’s position as a jurisdiction that supports innovation within a well-defined and enforceable regulatory framework, appealing particularly to institutional and compliance-focused market participants.

Regulatory commentary

Commenting on the implementation of the updated framework, Charlotte Robins, Managing Director, Policy and Legal at the DFSA, stated that the enhancements reflect the regulator’s progressive approach to innovation and its responsiveness to market developments and stakeholder feedback. She emphasised that the updated rules provide firms with greater clarity and flexibility while ensuring alignment with international regulatory standards.

As digital assets continue to evolve, the DFSA has reiterated its objective of maintaining a transparent, predictable, and proportionate regulatory environment that safeguards market integrity and supports sustainable growth within the DIFC.

Outlook

The new Crypto Token rules take effect immediately, from 12 January 2026. To support market understanding of the revised regime, the DFSA will host a digital assets webinar on 27 January 2026, providing further insight into the regulatory framework, its evolution, and the broader DIFC ecosystem for digital asset innovation.

Overall, the updated framework marks a significant step in the maturation of crypto regulation within the DIFC. By placing greater responsibility on firms while reinforcing supervisory expectations, the DFSA aims to foster a resilient and credible digital assets market capable of supporting long-term growth under robust regulatory oversight.

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