UAE Crypto Regulation Sees Key Relaxation, DFSA New Framework Could Reshape Middle East Digital Asset Landscape

On February 14th, the Dubai Financial Services Authority (DFSA) officially released a Frequently Asked Questions (FAQ) document updating cryptocurrency regulations, further clarifying its new regulatory framework implemented in the Dubai International Financial Centre (DIFC). The framework was first announced in December 2025 and took effect in January 2026. The key change is that DFSA-regulated entities can choose which types of cryptocurrencies to work with without needing to apply for approval from regulators on a case-by-case basis.

DFSA stated that this move aims to strengthen market integrity and investor protection while providing more practical compliance guidance for businesses. Elizabeth Wallace, Deputy Director of Policy and Legal Affairs, said in an interview that shifting the token assessment responsibility to companies aligns with international regulatory trends and responds to market demands. She expects that with the implementation of the new rules, the trading volume of crypto assets within DIFC will significantly increase in 2026.

From a legal perspective, Kokila Alagh, founder of KARM Legal Consulting, believes this shift signifies the maturity of the ecosystem and aligns DIFC with major global financial free zones. She emphasized that companies will bear higher compliance obligations, requiring the establishment of comprehensive internal assessment, ongoing monitoring, and disclosure mechanisms.

Andrew Forson, President of DeFi Technologies, pointed out that the token market is rapidly evolving, and companies often have better insight than regulators into which assets fit their business models. Eliminating the “approved list” system helps avoid restrictions on innovation and competitiveness caused by centralized screening.

This FAQ, based on feedback from over 600 industry participants, clarifies that cryptocurrencies mainly refer to assets used for payments or investment mediums, excluding NFTs, utility tokens, or security tokens. Stablecoins are limited to use by asset management companies for payments. DFSA also listed suitability assessment criteria, including token purpose, governance structure, global liquidity, regulatory status, and technical risks.

As this flexible yet strict framework is implemented, the UAE is gradually consolidating its strategic position in the Middle Eastern crypto finance sector.