The proposed regulation 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, said DFSA director.
The Dubai Financial Services Authority has called upon crypto users and stakeholders to submit public comments on its proposed security tokens regulations, in a press release earlier today. The initiative is the latest step by the DFSA in continuing its efforts to create a standardised framework for cryptocurrency regulations in the megacity.
Dubai’s financial regulatory body said in the press release that the public comments phase of the process will last for 30 days, after which, all suggestions and criticisms will be reviewed.
The public comments phase is part of the procedure for instituting the proposed “Framework for Regulating Security Tokens”, which is aimed at creating a regulatory framework for cryptocurrencies that will be classified as security tokens.
Dubai’s security token infrastructure is focused on achieving regulatory clarity on three major areas of concern.
The creation of a regulated framework under which investors and retail buyers can offer and trade digital securities is the first step in the process of achieving such clarity. Regulatory clarity will play a crucial factor in inviting international investors and crypto businesses to the city.
The second area of concern is to ensure security token issuers comply with strict disclosure requirements in their prospectuses in order to meet quality control protocols in the interests of retail investors.
Finally, the DFSA is looking to focus on the support services associated with security tokens including asset custody providers and advisory services.
DFSA chief executive Bryan Stirewalt explained the need for clear cut regulations for security tokens based on decentralised ledger technology by saying that “The proposal for the 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.”
The chief executive added that the proposal will also benefit those “firms who intend to be involved in this market, by conducting or providing financial services.”
The DFSA’s goal is to primarily ensure that adequate regulatory oversight is achieved without hampering innovation in the digital asset space, Stirewalt explained, stressing the need to strike a fine balance between the two. The laws regarding utility tokens and exchange tokens are expected to be published by the regulatory authority later this year.