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Dubai Regulator Bans Privacy Tokens in DIFC Introducing Tighter Crypto Rules

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Dubai’s monetary regulator has moved to ban privacy-focused cryptocurrencies throughout the Dubai International Financial Centre (DIFC), citing heightened dangers associated to anti-money laundering and sanctions compliance.

Key Takeaways:

  • Dubai has banned privateness tokens and anonymity instruments in the DIFC to align with international AML and sanctions requirements.
  • The regulator has tightened stablecoin definitions, excluding algorithmic fashions from “fiat crypto token” standing.
  • Crypto corporations, not regulators, are actually answerable for approving and monitoring the tokens they record.

The resolution is a part of a broader overhaul of the emirate’s crypto framework that additionally narrows the definition of stablecoins and shifts larger duty for token approval onto licensed corporations.

Dubai Shifts Crypto Oversight From Token Approval to Firm Accountability

The up to date Crypto Token Regulatory Framework, which takes effect on January 12, displays a change in method by the Dubai Financial Services Authority.

Rather than sustaining a centralized record of authorised crypto belongings, the regulator will give attention to imposing international compliance requirements and holding corporations accountable for the tokens they select to supply.

Under the brand new guidelines, privateness tokens are prohibited throughout buying and selling, promotion, fund exercise and derivatives performed in or from the DIFC.

The ban arrives at a time when some privacy-focused belongings have seen renewed market consideration, however the DFSA mentioned compliance issues depart little room for flexibility.

In addition to banning privateness cash, the framework additionally prohibits regulated corporations from utilizing or providing instruments designed to masks transaction knowledge, together with mixers, tumblers and different obfuscation providers.

The transfer locations Dubai nearer to the European Union’s stance beneath MiCA, which has successfully pushed nameless crypto exercise out of regulated markets, whereas contrasting with jurisdictions similar to Hong Kong that also permit privateness tokens in principle beneath strict licensing situations.

Stablecoins are one other main focus of the revised guidelines.

The DFSA has tightened its definition of what it calls “fiat crypto tokens,” limiting the class to belongings pegged to fiat currencies and backed by high-quality, liquid reserves able to assembly redemptions in periods of stress.

Algorithmic stablecoins, which depend on buying and selling mechanisms somewhat than direct asset backing, fall exterior that definition.

While algorithmic tokens wouldn’t be banned outright, they’d be handled as commonplace crypto belongings somewhat than stablecoins throughout the DIFC framework.

Perhaps essentially the most important shift is procedural. Instead of approving particular person tokens, the DFSA will now require licensed corporations to evaluate, doc and repeatedly overview the suitability of the crypto belongings they record.

The regulator mentioned the change was formed by business suggestions and acknowledges the rising maturity of corporations working in the DIFC.

UAE Continues to Attract Crypto Firms

The transfer comes because the UAE continues to place itself as a regional hub for blockchain innovation and crypto finance, with regulatory readability attracting main international gamers.

As reported, a state-backed funding agency in Abu Dhabi is about to make a $2 billion investment into crypto trade Binance utilizing USD1, a stablecoin developed by World Liberty Financial — a crypto enterprise intently tied to the Trump household.

Experts declare the UAE is poised to become a key vacation spot for crypto and stablecoin ventures searching for refuge from the European Union’s (EU) newly applied Markets in Crypto-Assets (MiCA) regulation.

The regulatory framework, which took full impact on December 30, is creating important challenges for crypto corporations throughout the 27-member bloc, prompting many to think about relocating, in line with business specialists.

Among its stringent necessities, small stablecoin issuers should maintain 30% of their reserves in low-risk EU-based industrial banks, whereas main gamers like Tether face a mandate to keep up 60% or extra in comparable establishments.

The submit Dubai Regulator Bans Privacy Tokens in DIFC Introducing Tighter Crypto Rules appeared first on Cryptonews.

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