Dubai’s regulator has allowed trading of foreign crypto ETFs in the free economic zone

The rules have also been relaxed for local crypto fund issuers

03.06.2024 - 15:15

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What’s new? The Dubai Financial Services Authority (DFSA) has amended the crypto regulatory regime to allow shares of foreign cryptocurrency funds to be offered in the local market. In addition to this, local funds targeting qualified investors will now be able to offer investments in “unrecognized” cryptocurrencies.

Press release

What else is known? The DFSA is an independent regulator in the UAE that oversees entities registered in a special economic zone called the Dubai International Financial Centre (DIFC). Accordingly, the proposed changes will affect DIFC-registered firms.

The changes are based on a consultation paper from January, which noted that fund managers called the restrictions too stringent. Foreign issuers will now be able to offer fund shares based on cryptocurrencies recognized by the regulator, including bitcoin, Ethereum, Litecoin, XRP, and Toncoin.

As for local funds, they will be able to invest in cryptocurrencies that are not included in the list of recognized ones, while the amount of investments should not exceed 10% of the total value of the funds’ assets.

Prior to the amendments, the fee to apply for token recognition was $10 000. The DFSA noted that many people found this fee excessively high, especially multi-asset firms. Based on feedback, the regulator lowered the fees to $5000 and also introduced additional criteria for recognizing stablecoins.

DFSA chief executive Ian Johnston said the regulator is committed to fostering innovation while respecting transparency, so will continue to improve the regulatory framework.

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The parties are committed to long-term cooperation aimed at improving interaction with fans

Earlier, the Dubai Virtual Asset Regulatory Authority (VARA) began exploring ways to reduce the compliance-related financial burden for smaller crypto companies.

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