DIFC Shifts Approach on Suitable Crypto Tokens

Overview

On 15 December 2025, the DFSA announced amendments to the rules relating to the regulation of Crypto Tokens. This follows on from consultation paper no.168.

Suitability of crypto tokens

Under the previous regime, a firm was only permitted to carry out financial services activities (subject to certain exceptions, including for example for custody services) in or from the DIFC in relation to a ‘recognised crypto token’ (a token that had been recognised by the DFSA). Under the new rules, the DFSA-led recognition requirement is removed and instead the firm conducting the activity in relation to a Crypto Token (excluding Fiat Crypto Tokens) will be required to assess that the Crypto Token is suitable for use by that person in relation to that activity.

When considering whether a Crypto Token is suitable, a firm will need to consider:

• the characteristics of the Crypto Token, including as regards its purpose, governance arrangements and founders
• the regulatory status of the Crypto Token in other jurisdictions, including whether it has been assessed or approved for use by a financial services regulator
• the size, liquidity and trading history of the market for the Crypto Token globally
• the technology used in connection with the Crypto Token
• whether the use of the Crypto Token could prevent the person from complying with legislation administered by the DFSA

The firm will also be required to prominently disclose the list of Crypto Tokens it has assessed to be suitable, continuously review and monitor such tokens (at least once every 6 months) and cease activity where necessary. The firm will also need to maintain records and be able to demonstrate to the DFSA the grounds on which it has assessed a Crypto Token to be suitable and authorised persons in the DIFC will be subject to reporting requirements.

The DFSA has published Supervisory Guidelines for assessing the suitability of Crypto Tokens, providing a range of indicators as to when a Crypto Token might (or might not) be considered suitable.

Fiat crypto tokens

With respect to Fiat Crypto Tokens (a crypto token is a fiat crypto token if, to stabilise its price or reduce volatility in its price, the value of the crypto token purports to be determined by reference to a single fiat currency), the current approach is retained where the DFSA determines whether a Fiat Crypto Token is suitable for use in the DIFC.

The DFSA has published a Policy Statement setting out the criteria the DFSA will take into account when assessing the suitability of a Fiat Crypto Token as well as a list of the Fiat Crypto Tokens currently assessed by the DFSA to be suitable (Circle Euro Coin, Circle USD coin and Ripple USD).

Additional amendments

The amended rules also include:

• removing the regulatory requirements relating to recognised jurisdictions in relation to Crypto Tokens
• removing certain restrictions on funds that invest in Crypto Tokens, including in relation to authorised firms offering units of a foreign fund that invests in Crypto Tokens. See the changes to the Collective Investments Rules
• removing the requirement for those arranging or providing custody to provide a key features document in relation to Investment Tokens and removing the restrictions relating to percentage and type of Crypto Tokens that can form part of the net asset test for an assessed professional client

Next steps

The rules come into force on 12 January 2026. The rules include a transition period where a Crypto Token, other than a Fiat Crypto Token, which was recognised by the DFSA will continue to be deemed suitable for a period of three months following the commencement date of the rules.