The Dubai Financial Services Authority (DFSA) has issued a proposal for regulating the growing use of security tokens and is seeking public feedback.
The Framework for Regulating Security Tokens proposes that its current regulatory regime be updated to cover the issuance and trading of security tokens as well as related services such as digital custody.
It also proposes that facilities that trade security tokens be allowed direct access to members, including retail clients.
The regulator noted that “allowing direct access is a significant shift from the current intermediated model of trading in the markets”.
Other proposals address investor protection and include more stringent requirements on disclosure in prospectuses and enhanced systems and control requirements to deal with the use of distributed ledger technology (DLT).
DFSA chief executive Bryan Stirewalt said that the proposals are designed to provide “a clear and certain path for those issuers who wish to raise capital in or from the Dubai International Financial Centre (DIFC) using DLT and similar technology, and for those firms who intend to be involved in this market”.
“We have drawn on the experience of other regulators who have taken cautious steps in this rapidly developing area, while addressing DIFC specific needs,” added Stirewalt.
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