The Dubai Financial Services Authority (DFSA) published a consultation paper on a “Framework for Regulating Security Tokens” on 29 March 2021 with a consultation period of 30 days. The proposed regulations will apply to security tokens and derivatives and will cover public offers of security tokens, the admission of security tokens to trading on trading facilities and the provision of financial services relating to security tokens such as providing custody relating to digital wallets. Some of the key changes proposed are: allowing facilities that trade security tokens to have direct access members, including retail clients, enhanced systems and controls requirements to address associated risks, enhanced prospectus disclosure and enhanced requirements for custodians of digital wallets. According to the press release, the DFSA will issue proposals for other types of tokens, such as exchange tokens and utility tokens, later in 2021.
