The Dubai Financial Services Authority (DFSA) published its consultation paper for Security Token offerings in or from the Dubai International Financial Centre (DIFC) recently. Earlier this year, DFSA had announced, in its 2021 Business Plan, that it was planning to regulate digital assets.
“While we have yet to use Blockchain, we are working on a project in 2021 to ensure we are a more effective regulator and as such we are looking into whether the data we receive from companies we regulate can actually become more real-time instead of studying balance sheets after the fact. We are realising that the use of data analytics is relevant and we are exploring this avenue, yet with no final decisions made,” said According to Peter Smith, Managing Director, Head of Strategy Policy and Risk at the DFSA.
Given that DFSA is currently regulating entities that are using types of Distributed Ledger Technology (DLT) in their operations, the DFSA could oversee these activities by being a node. “Being a node on their blockchain could enable us to see certain things in real-time that otherwise we wouldn’t be able to see.”
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More and more companies are interested and are approaching DFSA, which is further developing the national innovation strategy set by Dubai and the UAE government, with requests to incorporate blockchain based applications and service entities in DIFC.
“We have received many requests for the issuance of shares through Security Token offerings, so we have created a framework for them to do this in line with international best practices,” said Smith.
“It might have taken some time to come out with the Security Token regulatory framework, but once it is out, it will be quicker to get the licence. We would rather have a fully comprehensive regulation rather than high level principles and then have to fill in the gaps,” he added.
By the second quarter of 2021, the DFSA would approve internally, and then implement it in quarter three of this year. The Security Token regulations will cover the issuance, trading, custodial services, marketing, secondary market exchanges and even digital wallet providers.
(With Inputs From Agencies)
