The Dubai Financial Services Authority published a consultation paper where it proposes different elements to regulate security tokens.
An important part of the paper on regulations is the definition that the DFSA is giving on security tokens. These are classified as “tokens that provide rights and obligations akin to specified investments under the Regulated Activities Order.”
The consultation paper acknowledges the importance of the regulation of crypto assets. Also, it clearly states that those particular assets are not meant to be regulated with the same guidelines. This particular consultation paper numbered 138 is mainly for security tokens.
What Are Regulations Trying To Accomplish?
DFSA CEO Bryan Stirewalt stated, “Our proposals promote and facilitate innovation, while also protecting consumers, addressing market integrity and mitigating ML/FT and other risks.”
Besides, the regulation is trying to provide a better framework for companies to operate under. One of the key elements of the proposal is to allow facilities that trade security tokens to have direct access to members. This basically means that companies will be able to process direct payment in security tokens from potential clients.
Wallets & ATS Platforms
In the brief, DFSA states that the regulations intend to enhance requirements from those providing custody of digital wallets. Companies with an Application Tracking System (ATS) license could see an increased role as well. The proposals contemplate allowing them to hold the cash from clients. Currently, they are not allowed to do that. Also, one of the options is to allow ATS platforms to host ICO’s.
Amongst the regulation proposals, most aim at expanding the capabilities of ATS platforms and digital wallet providers. At the same time, the regulations to be able to obtain a license will indeed increase.
From Proposed Regulations To Laws
Basically, the purpose of the public consultation is to serve as the first step towards building a framework to propose new legislation. As a result, the DFSA may proceed to craft a law proposal.