The DFSA Board has issued a Feedback Statement to explain the conclusions that were reached and the final rules put in place regarding the consultation paper that was published in March.
In March 2022, the DFSA published Consultation Paper 143 – Regulation of Crypto Tokens (CP143), which set out proposals for a regulatory regime for individuals seeking to provide financial services related to Crypto tokens. In fact, this was the second consultation paper that was issued on the matter, with the DFSA having consulted on the Regulation of Investment Tokens in 2021.
This Feedback Statement, which is likely to be of interest to all authorized individuals, registered auditors and designated non-financial businesses and professions (DNFBPs); applicants or potential applicants to become any of these and advisors, tackles different topics such as why is this Feedback Statement being issued, who should read it, terminology and more.
It is important to note that the DFSA received 23 sets of comments from a range of stakeholders in response to CP143, including authorized firms in the DIFC, crypto businesses, law firms and others. A list of respondents is included as Annex 1 to this Statement.
Given the breadth of comments received, the DFSA board members believe that they needed to set out and explain their thinking in areas where changes were made, or where they had reasons not to make changes regarding the proposals they consulted on.
Most respondents supported their proposals, with many providing further insights or seeking additional clarifications and refinements to their proposals. The
feedback the DFSA received resulted in some changes to the proposed rules, but in a way that clarified their position and removed potential ambiguities.
No major amendments were made that would materially change their proposed regime for regulating Crypto tokens, except as highlighted in Part 1, Section 2: Recognition
of Crypto Tokens.
The final law changes are rules included as Annex 2 to this Statement Part 2: Future work on Crypto Tokens.
The DFSA also set out in this Statement their thoughts around some other policy issues relating to Crypto tokens, which they plan to explore further as part of future public consultations. This includes looking at areas such as staking, DeFi and AML/CTF issues, including the Travel Rule.
Lastly, they set out how they will deal with those applying to the DFSA to get licensed to provide crypto token-related products and services, where they expect firms to display a readiness in terms of human capital and resources to prepare for regulation.
The rules discussed in this Statement, arising from the consultation on CP143, commence on 1 November 2022.
For the full Statement, kindly click here.