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Cryptopolitan 2025-03-18 14:30:26

Dubai International Financial Center (DIFC) announces tokenization regulatory sandbox, calls for EOIs

Despite the fact that the Dubai Financial Services Authority (DFSA), based out of Dubai (UAE), launched its regulatory framework for investment tokens in 2021, the regulator notes that it didn’t witness substantial growth in the number of firms seeking to tokenize investments. It has now announced the launch of its tokenization regulatory sandbox. After ample market discussions, the DFSA recognized some inherent challenges slowing tokenization projects, such as interoperability issues, scalability issues, education, and regulatory clarity. To tackle these issues, the DFSA has introduced the tokenization regulatory sandbox (TRS), which has two stages: the innovation testing license (ITL) under the tokenization cohort and a DFSA license to enter the program. As per the press release , the region asked firms to submit their expression of interest before April 24, 2025. The TRS will allow testing in a controlled environment The tokenization regulatory sandbox will allow firms to test innovation products and services in a controlled environment. The sandbox will also provide an opportunity for firms to test tokenized financial solutions. It will offer a regulatory pathway from experimentation to full authorization. The DFSA’s innovation testing license has already been instrumental in supporting fintechs and digital finance pioneers in the DIFC. It will now expand its scope to tokenized investments. Dubai opens the door to crypto participants As per the guidelines set by the DFSA, firms who are engaged in the tokenization of financial services such as trading, holding or settling tokenized investments like equities, bonds, sukuk, and collective investment fund units can express their interest in joining. Additionally, existing DFSA-authorized firms who want to expand into the tokenization field can also apply. Firms are required to have a strong understanding of the legal and regulatory requirements. Interested firms will undergo an assessment process, and those that demonstrate strong business models and regulatory understanding may be invited to participate in the DFSA’s tokenization regulatory sandbox, where they will receive tailored regulatory support and structured testing opportunities, under what is called the ITL tokenization cohort. The ITL tokenization cohort is the DFSA’s version of a regulatory “sandbox” focused on tokenization-related activities. The announcement comes as more and more tokenization projects flourish in the UAE, with examples including Mantra Blockchain’s recent partnership with DAMAC Holdings to tokenize $1 billion worth of assets. Additionally, other countries across the GCC and MENA region, such as Qatar have already made great strides with their tokenization and digital asset regulations and labs. In a recent Cryptopolitan interview with Stobox founder, he noted that the MENA tokenization market could account for as much as 20% of the expected $30 trillion tokenization market by 2030. Stobox, was one of the 29 blockchain firms that have been accepted into Qatar Financial Centre’s Digital Assets Lab. Ross Shemeliak, the co-founder of the firm, noted that tokenization is taking the world and MENA region by storm. Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now

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