The Dubai Financial Services Authority has launched the tokenization regulatory sandbox to support firms developing tokenized investment products within the Dubai International Financial Centre.

The Dubai Financial Services Authority (DFSA) has announced the launch of its Tokenisation Regulatory Sandbox, a new initiative designed to support firms exploring tokenized investment products and services within the Dubai International Financial Centre (DIFC).

The Dubai Financial Services Authority (DFSA) has announced the launch of its Tokenisation Regulatory Sandbox to support firms exploring tokenized investment products and services within the Dubai International Financial Centre (DIFC).

The initiative marks a significant step in the DFSA’s overarching strategy to promote responsible innovation in the financial services sector.

The sandbox will operate in two phases: Expression of Interest and Innovation Testing Licence (ITL) Tokenisation Cohort.

The Expression of Interest period, beginning on March 17, 2025, allows firms to signal their intent to participate in the sandbox. Firms can apply for the ITL Tokenisation Cohort, focusing on tokenized investment products such as equities, bonds, and fund units.

This could include issuance, trading, or any other activity within the DIFC related to these instruments. Existing authorized firms in the DIFC can also apply to expand their business into tokenization.

However, crypto and so-called fiat crypto tokens are excluded from the scope of this initiative.

Interested firms are encouraged to submit their applications for the Expression of Interest phase between March 17, 2025, and April 24, 24, 2025. No application fee is applicable.

Successful applicants will then be invited to join the ITL Tokenisation Cohort.

Some of the benefits of participating in the ITL cohort include:

* Commencing their activity in the DIFC earlier than under a full license.

* Receiving close regulatory guidance from the DFSA throughout the testing period.

* Setting up and testing their business model and technology in a controlled manner in a live market environment.

* Having the opportunity to transition to a full DFSA license if they meet the required standards and customer feedback is positive.

This sandbox aims to provide greater clarity on tokenization rules within the DIFC and ultimately facilitate the development of new and innovative financial products that can benefit both consumers and the wider economy.