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Dubai Issues Rules for Security, Derivatives Tokens

The regulator also plans to roll out rules for exchange and utility tokens as well as stablecoins.

Updated May 11, 2023, 5:12 p.m. Published Oct 26, 2021, 9:50 a.m.
Dubai (David Rodrigo/Unsplash)
Dubai (David Rodrigo/Unsplash)

Dubai’s Financial Services Agency announced rules for “investment tokens,” which can represent securities or be derivatives.

  • The agency defines investment tokens as cryptographically secured tokens that have some of the same attributes as securities and derivatives, and are issued, transferred and stored using distributed ledger technology.
  • These tokens are different from exchange tokens or cryptocurrencies. Security tokens are blockchain-based representations of underlying assets. Derivatives tokens derive their value from other tokens.
  • The framework, which is not detailed in the announcement, applies to any firms that want to issue or trade investment tokens in the emirate’s Dubai International Financial Centre, and accredited firms that wish to offer financial services related to investment tokens.
  • The DFSA is also planning to roll out a framework for exchange and utility tokens, as well as some asset-backed tokens such as stablecoins, according to the announcement. The agency will issue a consultation paper on this regulation in the fourth quarter.
  • The new rules are based on a consultation paper that was issued by the agency in March.

Read more: Security Tokens Are Back and This Time It’s Real

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