DUBAI — Dubai’s financial free zone regulator has rolled out a major reset of how crypto assets are supervised inside the Dubai International Financial Centre (DIFC), tightening guardrails around stablecoins while drawing a hard line against privacy-focused tokens and tools.
The Dubai Financial Services Authority (DFSA) said updated rules for Crypto Tokens in the DIFC took effect 12 January 2026, strengthening a framework first introduced in 2022 and shifting more responsibility to licensed firms. Under the new approach, firms that provide financial services involving crypto assets must decide—on a “reasoned and documented basis”—whether each token they use meets DFSA suitability standards, as the regulator will no longer maintain a prescribed list of “Recognised Crypto Tokens.”
A firm-led “token suitability” regime
The centerpiece of the reform is a move toward market-led oversight with heavier accountability. Rather than relying on a regulator-curated list, firms must perform due diligence against DFSA criteria—covering a token’s characteristics and governance, its regulatory treatment elsewhere, market liquidity and trading history, the underlying technology, and whether the token’s use could prevent the firm from complying with DFSA-administered legislation.
For DIFC crypto businesses—exchanges, brokers, custodians, and advisers—this means compliance teams will need tighter internal controls, clearer documentation trails, and ongoing monitoring. DFSA guidance emphasizes that firms should be ready to demonstrate the robustness of their assessments during supervision.
Privacy tokens: prohibited, broadly defined
Alongside the new suitability framework, the DFSA continues to prohibit Privacy Tokens and extends the prohibition across multiple touchpoints of the financial system.
In the DFSA rulebook, a “Privacy Token” is defined as a crypto token (or the distributed ledger technology behind it) with features used—or intended to be used—to hide, anonymise, obscure, or prevent tracing of key transaction information (such as transaction data, identities of holders or counterparties, transaction value, or beneficial ownership).
The DFSA’s prohibition goes beyond trading venues. The rules state that an authorised firm must not provide financial services “in relation to” a Privacy Token, must not promote it, offer it to the public, or establish/operate a fund involving it—and must not issue derivatives referencing privacy tokens. The same chapter also restricts the use of “Privacy Devices,” which include certain wallets or mechanisms designed to obscure tracing (with VPNs explicitly excluded from that definition).
For everyone tracking Dubai crypto regulation, the message is straightforward: inside the DIFC, privacy-enhancing crypto assets and transaction-obscuring devices are considered incompatible with the transparency expectations of a regulated financial center.
Stablecoin rules tightened: reserves, transparency, and approved tokens
The DFSA also doubled down on stablecoins—called “Fiat Crypto Tokens” in its framework—by reinforcing what qualifies as a stablecoin and what standards are required for acceptance.
A DFSA explainer notes that a token is treated as a Fiat Crypto Token (stablecoin) when it aims to stabilize price by reference to a single fiat currency; stablecoins pegged to multiple currencies are generally treated differently because maintaining a multi-currency peg can be operationally complex.
More importantly, the DFSA has published a dedicated Policy Statement on Fiat Crypto Tokens detailing the factors it will consider when assessing suitability. The criteria include whether a token can maintain a stable price relative to its reference currency and whether reserves are at least equal to outstanding tokens, denominated in the reference currency, held in liquid and low-credit-risk assets, and kept in segregated accounts with properly regulated banks or custodians in jurisdictions with equivalent regulation and AML standards aligned to FATF recommendations. The policy also expects at least monthly public reserve information and independent third-party verification.
The annex to the policy statement lists the fiat stablecoins the DFSA has assessed as suitable for use in and from the DIFC: Circle’s USDC, Circle’s EURC, and Ripple USD (RLUSD).
Why the crackdown now? Global AML pressure is rising
Dubai’s tightening stance lands amid heightened international attention on crypto’s financial crime risks—especially where obfuscation or fast-moving payment rails are involved. In a 2025 update, the Financial Action Task Force (FATF) warned that illicit actors’ use of stablecoins has continued to rise and highlighted uneven implementation of global standards like the “Travel Rule” for cross-border transfers.
The DFSA’s stablecoin criteria—reserve quality, segregation, disclosures, third-party verification, and AML equivalence—read like a direct response to these concerns, designed to make DIFC-regulated stablecoin usage more auditable and resilient under stress.
What it means for DIFC crypto firms and investors
For DIFC-licensed firms, the reforms increase flexibility—firms can engage with tokens they deem suitable—but also increase regulatory exposure if those judgments aren’t defensible. The DFSA has also signaled enhanced investor safeguards and refined reporting requirements to reflect evolving market risks.
For users and investors, the changes are meant to boost trust in a regulated crypto market: clearer disclosure, stronger custody and governance expectations, and a narrower, more transparent framework for DIFC stablecoin regulation.
Conclusion
As Dubai continues positioning itself as a global digital-asset hub, the DIFC’s message is increasingly compliance-forward: privacy tokens are out, algorithmic stabilization models are not welcome, and stablecoins must look and behave more like regulated payment instruments—with verifiable reserves and auditable controls.