The Riffle
The Dubai Financial Services Authority (DFSA) has issued Consultation Paper No. 174 (CP174), proposing a series of targeted amendments to enhance clarity, efficiency, and alignment within its regulatory framework.
The proposals focus on three key areas — refining the treatment of Crypto and Investment Tokens, streamlining requirements applicable to Credit Rating Agencies (CRAs), and updating the regulatory reporting framework.
The consultation reflects the DFSA’s continued efforts to adapt its rules to technological developments, international standards, and practical implementation challenges.
Key Highlights
1. Refining the Definition of Fiat Crypto Tokens
The DFSA proposes to narrow the scope of Fiat Crypto Tokens to strengthen value stability and reduce risks associated with reserve mismatches.
Under the proposed changes, a Fiat Crypto Token must be backed exclusively by:
the same fiat currency to which it is pegged; or
financial assets denominated in that same currency.
The objective is to ensure a more credible value stabilisation mechanism by reducing foreign exchange and currency mismatch risks.
Tokens that do not meet the revised requirements may still qualify as Crypto Tokens, but firms will need to assess their classification, permitted activities, and marketing approach.
2. Updating Privacy Token Requirements
The DFSA is proposing changes to the definitions of Privacy Tokens and Privacy Devices to ensure that restrictions remain focused on genuine financial crime risks.
The proposed amendments aim to avoid capturing tokens or technologies that provide limited privacy features but still allow sufficient visibility to identify transaction participants and trace transactions.
This approach seeks to balance innovation in digital assets with effective AML and financial crime safeguards.
3. Modernising the Investment Token Framework
The DFSA has identified areas where the existing Investment Token definition may be too restrictive, particularly as tokenisation models continue to evolve.
Key proposed changes include:
Recognition of hybrid structures
The revised approach aims to accommodate structures where elements may operate both on-chain and off-chain, including tokenised financial instruments.
Simplified drafting
The DFSA proposes removing duplicated language by relying on the broader definition of “Token” within the Glossary module.
Greater regulatory certainty
The amendments seek to clarify that Investment Tokens apply to Securities and Derivatives represented through tokenisation, without relying on broader “substantially similar purpose or effect” wording.
4. Streamlining Requirements for Credit Rating Agencies
The DFSA proposes updates to the Credit Rating Agency (CRA) regime to better align with international standards and remove unnecessary compliance burdens.
The proposed changes include:
Conflict of Interest Rules
Current restrictions relating to employees and their close relatives may be narrowed so that limitations apply only where a relationship creates, or may appear to create, an actual conflict of interest.
Disclosure Requirements
The DFSA proposes removing certain duplicate disclosures, including:
the requirement to disclose fee information in every rating announcement, where such information is already publicly available; and
disclosure requirements relating to whether information used for structured financial product ratings is public or non-public.
5. Enhancing Regulatory Reporting Frameworks
Following previous consultations on prudential requirements, the DFSA proposes updates to regulatory reporting forms under the PIB module.
The amendments aim to support more granular data collection and improve the DFSA’s ability to monitor ongoing compliance.
The DFSA also intends to test the updated forms with firms to gather feedback on technical implementation.
Timeline
9 July 2026
DFSA Consultation Paper No. 174 issued
24 August 2026
Deadline for submission of public comments
Post-consultation
DFSA to review feedback and finalise amendments to relevant Rulebook modules, including GEN, COB, PIB, GLO, CIR, and AMI.
Why It Matters
CP174 demonstrates the DFSA’s continued focus on maintaining a regulatory framework that evolves alongside financial innovation.
For firms operating within the DIFC, the proposed changes may impact:
classification and treatment of digital assets;
token structuring and related financial services activities;
CRA governance and disclosure practices; and
regulatory reporting obligations.
Firms should review the proposed amendments, assess potential operational impacts, and consider submitting feedback before the consultation deadline.
The Riffle Takeaway
The DFSA’s latest proposals represent a move towards a more precise, technology-neutral, and proportionate regulatory framework.
By refining digital asset definitions, reducing unnecessary compliance requirements, and enhancing reporting capabilities, CP174 seeks to support innovation while maintaining strong regulatory oversight within the DIFC ecosystem.
