Dubai’s DFSA Opens Tokenisation Sandbox for Securities, Excludes Cryptocurrencies and Stablecoins

The Dubai Financial Services Authority (DFSA) has introduced a tokenisation sandbox and is accepting expressions of interest until April 24 of this year. 

As the regulator for the Dubai International Finance Centre (DIFC), the DFSA’s sandbox targets firms involved in the issuance, trading, holding, or settlement of tokenised assets, excluding cryptocurrencies and stablecoins —no testing for you. 

Instead, the sandbox focuses on financial instruments that mirror conventional securities, such as equities, bonds, sukuk (an Islamic-compliant bond), and collective investment fund units.

Benefits for Tokenisation Firms

Under the sandbox, companies, whether already DIFC-regulated or not, can receive an Innovation Testing License (ITL) valid for six to twelve months, relaxing certain regulatory requirements while the firm conducts live market testing. This helps participants clarify tokenisation requirements within the DIFC. 

Relaxations are assessed on a case-by-case basis; once the ITL period concludes, the entity will either be granted a full DIFC license or see the ITL terminated.

Related: Trump’s Crypto Council Forecasts US Stablecoin Bill Within Two Months

Tokenisation rules were introduced in the DIFC in 2021. While these regulations enable consumer trading without intermediaries, access remains permissioned and must adhere to additional requirements, such as reporting custody arrangements and undergoing technology audits, compared to conventional securities.

In Dubai, Tokenised real estate is projected to account for 7% of the city’s total property transactions, potentially reaching 60 billion dirhams (AU$25B) by 2033. This move aligns with the rising popularity of tokenised RWAs. 

Polygon’s CEO recently stated that tokenisation could eliminate some of the barriers for property investors worldwide, starting with one major issue hindering real estate growth: liquidity.