Regulations Update: Responsible DIFC Crypto Oversight
Dubai is positioning itself as a global hub for digital assets. As per official reports, the DFSA has unveiled a major change in its Crypto Token Regulatory Framework, putting the onus for crypto token suitability assessments on licensed firms based in DIFC.
According to the amended rules effective this week, firms providing crypto-related financial services must now independently assess whether the tokens they support meet DFSA standards. In a policy change, DFSA will no longer maintain a public list of approved crypto tokens, placing full responsibility on regulated market participants.
Reasons for DFSA Modifying Its Crypto Token Framework
The update follows a public consultation initiated in October 2025, reflecting how the DFSA’s thinking has evolved since the original crypto token regime launched in 2022. The DFSA highlighted its engagement with the industry and ongoing monitoring of developments.
The DFSA’s Managing Director of Policy and Legal, Charlotte Robins, described the move as deliberate and forward-looking. According to her, the revamped framework demonstrates Dubai’s innovative approach while addressing market feedback and real-world behavior.
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Dubai’s New Regulations Apply Pressure on Privacy Tokens
While the update does not explicitly ban any class of digital assets, it raises regulatory standards, particularly for privacy coins.
The framework allows internal compliance teams to categorize certain tokens as higher risk by shifting assessments to licensed entities. Firms aiming to reduce regulatory exposure may apply stricter due diligence to privacy coins such as Monero (XMR) and Zcash (ZEC) or even exclude them from their platforms.
By not naming tokens specifically, DFSA tightens oversight while allowing market participants to determine their own risk tolerance.
DIFC and the Rest of Dubai: A Regulatory Schism
A key nuance is jurisdiction. The DFSA regulates financial services exclusively within DIFC, which operates under a common law framework. This is distinct from Dubai’s onshore regulatory framework.
Other regions of Dubai and the UAE have separate regulators, each with its own crypto rulebook. Consequently, the treatment of certain digital assets, especially privacy-focused tokens, can vary dramatically depending on licensing jurisdiction.
Dubai vs. VARA and UAE Laws
Unlike the DFSA’s principles-based model, Dubai has introduced the Virtual Assets Regulatory Authority (VARA). In 2023, VARA banned “anonymity-enhanced cryptocurrencies,” effectively prohibiting privacy coins and related activities outside DIFC.
Elsewhere in the UAE, regulations differ. Abu Dhabi Global Market (ADGM) applies a risk-based, conservative framework without a blanket ban, while federal regulators prioritize compliance with anti-money laundering and counter-terrorist financing measures.
A Fragmented but Strategic Crypto Landscape
The regulatory landscape remains fragmented. Privacy-focused crypto assets are not universally illegal but are subject to varying treatment depending on jurisdiction.
DFSA’s delegation of responsibility to licensed entities reflects significant trust in institutional compliance. At the same time, the move reinforces Dubai’s reputation as a disciplined yet innovative global financial hub.
For crypto firms operating in DIFC, the message is clear: flexibility comes with responsibility, and inaccurate token assessments carry serious consequences.
