Dubai DIFC Shifts Crypto Token Vetting Responsibility To Licensed Firms

TLDR

• DFSA will no longer publish or maintain a list of recognized crypto tokens in DIFC.
• Licensed firms must document and justify crypto token suitability decisions.
• Updated framework follows a DFSA consultation launched in October 2025.
• Privacy-focused tokens may face stricter reviews under firm-led assessments.

Dubai’s main financial free zone has changed how crypto tokens are assessed, placing more responsibility on licensed firms instead of the regulator. The Dubai Financial Services Authority has updated its rules for the Dubai International Financial Centre, shifting token suitability checks to companies operating inside the zone. The move changes how crypto businesses manage risk, compliance, and asset selection, especially for tokens linked to privacy features.

DIFC moves token suitability checks to firms

The Dubai Financial Services Authority has brought into force changes to its Crypto Token Regulatory Framework in the Dubai International Financial Centre. Under the revised rules, licensed firms must now assess whether crypto tokens meet the authority’s suitability criteria. The DFSA will no longer publish or maintain a list of recognized crypto tokens for use in the DIFC.

The updated framework follows a public consultation launched in October 2025. The regulator said the changes reflect its evolving approach since the crypto token regime was introduced in 2022. Over that period, the DFSA monitored market activity and worked with industry participants and other regulators. The aim was to keep the rules aligned with global regulatory standards.

Charlotte Robins, managing director of policy and legal at the DFSA, said the update reflects a shift in regulatory method. “The DFSA’s enhancements to the Crypto Token regime reflect our progressive stance on innovation and proactive response to market developments and feedback,” she said. The authority described the model as principles-based rather than prescriptive.

Licensed firms face higher compliance responsibility

Under the new approach, firms offering financial services linked to crypto tokens must document and justify their suitability decisions. This includes evaluating risks related to governance, technology, market behavior, and compliance controls. Firms must also ensure that their assessments meet the DFSA’s broader regulatory expectations.

The shift increases internal compliance pressure on licensed entities. Companies now carry direct responsibility if a token later raises regulatory or enforcement concerns. This may lead firms to adopt stricter internal reviews and limit the range of supported assets. The DFSA has stated that firms must keep clear records to support their decisions.

The regulator also confirmed that its anti-money laundering and counter-terrorism financing rules remain central to the framework. Firms are expected to apply strong customer checks, transaction monitoring, and risk management controls. These obligations apply regardless of token type or market popularity.

Privacy-focused tokens face closer scrutiny

The updated framework does not name or ban any specific crypto assets. However, the transfer of responsibility to firms may affect how privacy-focused tokens are treated within the DIFC. Assets such as Monero and Zcash may be considered higher risk by compliance teams due to transaction privacy features.

Without a DFSA-managed token list, firms must decide whether such assets meet suitability standards. Some licensed companies may apply higher due diligence thresholds or choose not to support privacy tokens. These decisions would be based on internal risk policies rather than explicit regulatory prohibition.

The DFSA’s rules apply only within the DIFC, which operates under a separate legal system from onshore Dubai. The financial free zone follows a common-law framework, while other parts of Dubai fall under different regulatory authorities. This distinction affects how crypto assets are treated across the emirate.

Dubai and UAE crypto rules remain divided

The DIFC’s approach differs from rules applied elsewhere in Dubai. In February 2023, the Dubai Virtual Assets Regulatory Authority introduced a ban on anonymity-enhanced cryptocurrencies. VARA’s rules apply to most areas of Dubai outside the DIFC and prohibit related activities involving privacy coins.

Across the wider United Arab Emirates, crypto oversight remains divided among several regulators. Abu Dhabi Global Market follows a risk-based framework without a blanket ban on privacy tokens. Federal regulators focus on compliance with AML and counter-terrorism financing standards across all financial activities.

As a result, privacy-focused crypto assets are treated differently depending on jurisdiction. Within the DIFC, licensed firms now decide which tokens they support. Outside the zone, other regulators apply their own restrictions. The updated DFSA framework adds another layer to Dubai’s multi-regulator crypto landscape.

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