Dubai's financial services regulator said on Monday that it will develop a regulatory framework for the cryptocurrency sector.
Announcing the effort in its business plan for 2021-2022, the Dubai Financial Services Authority (DFSA) said "a regulatory regime for digital assets (such as tokenized securities and crypto-currencies)" will be built.
"The DFSA is committed to remain 'open for business' with respect to innovation in the financial services sector and we continue to explore how our regulatory regime can accommodate new and innovative business models," said the regulator, which oversees financial services conducted in or from the Dubai International Financial Centre (DIFC), a tax-free zone in Dubai, UAE.
Details of the DFSA's plan are scant, but local outlet The National reported that the regulator will publish two consultation papers seeking feedback on its proposed rules in the first and second quarters of this year.
"We will look to regulate a wide range of digital assets, including security tokens, utility tokens, the various types of exchange (or payment) tokens, such as cryptocurrencies [and] the firms that provide relevant services in these markets," Peter Smith, the head of strategy, policy and risk at the DFSA told The National. "We will regulate these markets in a proportionate and thoughtful manner, drawing on best practices across the globe."
It should be noted that Ripple recently set up a regional base in Dubai, and the company's CEO, Brad Garlinghouse, has previously shortlisted the UAE for its new headquarters, among other countries, if it leaves the U.S. amid regulatory scrutiny in the country. The U.S. Securities and Exchange Commission recently sued Ripple, Garlinghouse, and co-founder Chris Larsen for engaging in sales of unregistered securities, i.e., XRP.
The UAE's Abu Dhabi already has crypto rules in place. The Financial Services Regulatory Authority of Abu Dhabi Global Market published its crypto framework in 2018 and has granted in-principal approvals to several crypto firms since then, including BitOasis and Matrix Exchange.
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