DFSA tightens crypto token rules in DIFC

Dubai’s financial regulator has rolled out a strengthened framework for crypto tokens in the Dubai International Financial Centre, marking a significant step in the evolution of the emirate’s digital assets oversight as global scrutiny of the sector intensifies.

The updated regime, announced on Tuesday by the Dubai Financial Services Authority, replaces and expands the rules introduced in 2022 and applies to all crypto token activities conducted within the Dubai International Financial Centre. Officials said the changes are designed to bolster market integrity, sharpen regulatory clarity for firms and investors, and create space for responsible innovation.

Stricter crypto oversight in DIFC takes shape as the revised framework tightens governance standards, risk management obligations and disclosure requirements for entities dealing in crypto tokens. The regulator has also refined the classification of tokens, offering more precise definitions that distinguish between different use cases and risk profiles, a move intended to reduce ambiguity for market participants and supervisors alike.

The DFSA said the enhanced rules reflect extensive feedback gathered during a public consultation launched in October 2025, which drew responses from crypto firms, financial institutions, legal advisers and technology providers operating in or seeking access to the DIFC. That consultation highlighted the need for clearer expectations on custody, valuation, technology governance and the handling of client assets, particularly after a series of global market failures exposed weaknesses in crypto risk controls.

Under the updated framework, firms offering crypto-related services face more detailed requirements on safeguarding client assets, including stricter segregation rules and enhanced oversight of custodial arrangements. The regulator has also sharpened standards around anti-money laundering controls, market abuse prevention and operational resilience, aligning the regime more closely with expectations applied to traditional financial services while recognising the distinct features of digital assets.

Technology governance has emerged as a central focus of the revised rules. Crypto firms will now be expected to demonstrate robust controls over their underlying systems, smart contracts and third-party technology providers. This includes clearer accountability at board and senior management level for technology risks, reflecting the DFSA’s view that failures in code, cybersecurity or system design can have consequences comparable to failures in capital or liquidity management.

Another notable element is the enhanced approach to disclosures and transparency. Issuers and service providers must provide clearer, more comprehensive information to clients about the nature of crypto tokens, associated risks, pricing mechanisms and potential conflicts of interest. The regulator believes this will help address long-standing concerns about information asymmetry in crypto markets, where retail participants often struggle to assess complex products.

The updated framework also seeks to balance oversight with innovation. By clarifying which activities fall within scope and setting out pathways for authorisation, the DFSA aims to give firms greater confidence to develop products and services in the DIFC without fear of regulatory uncertainty. Officials have stressed that the objective is not to stifle growth, but to ensure that innovation is anchored in sound governance and consumer protection.

Industry reaction has been broadly measured. Legal and compliance specialists said the revisions bring the DIFC closer to emerging international norms while retaining a degree of flexibility that could remain attractive to global crypto businesses. Some firms noted that the higher compliance burden may increase costs, particularly for smaller players, but acknowledged that clearer rules could enhance investor trust and long-term market stability.

The move comes amid intensifying global efforts to regulate digital assets following episodes of market volatility, insolvencies and enforcement actions in major jurisdictions. Regulators in Europe, Asia and North America have been tightening standards around licensing, disclosures and prudential safeguards, prompting crypto firms to reassess where and how they operate. Against that backdrop, Dubai has positioned itself as a jurisdiction seeking to combine regulatory rigour with openness to new financial technologies.

Within the DIFC, the DFSA has indicated that implementation of the updated regime will involve ongoing engagement with firms to ensure a smooth transition from the previous rules. Existing authorised entities will be expected to review their frameworks and make necessary adjustments within timelines set by the regulator, while new applicants will be assessed against the revised standards from the outset.