Dubai’s monetary regulator has banned privateness tokens throughout the DIFC from Jan. 12.
Stablecoins should now be fiat-pegged and backed by high-quality, liquid belongings.
Algorithmic stablecoins like Ethena are excluded from the stablecoin class.
Dubai’s monetary regulator has rolled out a serious replace to its crypto rulebook, drawing a transparent pink line round privateness tokens whereas altering how digital belongings are permitted contained in the Dubai Worldwide Monetary Centre.
The revised Crypto Token Regulatory Framework, efficient Jan. 12, displays a broader shift in regulatory philosophy.
Privateness tokens banned
Underneath the up to date framework, privateness tokens are prohibited throughout the DIFC.
The ban covers belongings designed to hide transaction histories or pockets holders, in addition to any associated monetary exercise.
This contains buying and selling, advertising and marketing, fund publicity, and derivatives referencing such tokens.
The choice arrives at a time when privateness cash have attracted recent consideration from merchants.
Monero XMR lately crossed an all-time excessive, and tokens reminiscent of ZEC have additionally seen elevated exercise.
Regardless of this, the DFSA views the dangers as incompatible with world compliance obligations.
The regulator’s place is rooted in Monetary Motion Process Power requirements, which require companies to determine each the originator and beneficiary of crypto transactions.
Privateness tokens, by design, make this stage of transparency troublesome to attain.
Because of this, the DFSA considers their use inconsistent with anti-money laundering and monetary crime controls anticipated of regulated companies.
Mixers and obfuscation instruments
The prohibition extends past tokens themselves.
Regulated companies within the DIFC are additionally barred from utilizing or providing privacy-enhancing gadgets reminiscent of mixers, tumblers, or different obfuscation instruments that cover transaction particulars.
This locations Dubai nearer to probably the most restrictive world approaches.
Whereas Hong Kong technically permits privateness tokens below a risk-based licensing mannequin that limits their sensible use.
By way of MiCA guidelines and an upcoming AML ban on nameless crypto exercise, privateness cash and mixers are successfully being pushed out of regulated European markets.
Stablecoin definition tightened
Stablecoins are one other central focus of the revised guidelines.
The DFSA has narrowed the definition of what it calls Fiat Crypto Tokens, limiting the class to tokens pegged to fiat currencies and backed by high-quality, liquid belongings.
These reserves have to be able to assembly redemption calls for even during times of market stress.
Algorithmic stablecoins fall exterior this definition attributable to issues round transparency and redemption mechanics.
Tokens reminiscent of Ethena, regardless of their fast development, wouldn’t qualify as stablecoins below the DIFC framework.
They aren’t banned however can be regulated as commonplace crypto tokens relatively than fiat-backed devices.
Companies take accountability
A big structural change within the framework shifts token approval accountability to business members.
As an alternative of sustaining a regulator-approved record of crypto belongings, the DFSA would require licensed companies to find out whether or not the tokens they provide are appropriate and compliant.
Companies should doc these assessments and preserve them below steady evaluate. The change displays suggestions from the business and the regulator’s view that the market has matured.
It additionally aligns with worldwide regulatory considering that asset choice selections ought to relaxation with companies, with supervisors specializing in oversight and enforcement relatively than approvals.
