TechFlow news, January 12 — According to CoinDesk, the Dubai Financial Services Authority (DFSA) has fully banned privacy tokens within the Dubai International Financial Centre (DIFC), citing incompatibility with global compliance standards and risks related to money laundering and sanctions evasion.
The updated regulatory framework for crypto tokens took effect on January 12, shifting token approval responsibilities to firms while tightening the definition of stablecoins. The DFSA has restricted the category of "fiat-referenced crypto tokens" to those pegged to fiat currencies and backed by high-quality liquid assets capable of meeting redemption demands even under market stress.
Elizabeth Wallace, Deputy Director of Policy and Legal at DFSA, stated that privacy tokens' ability to conceal transaction histories and holders makes it nearly impossible for firms to comply with Financial Action Task Force (FATF) requirements. The new rules also prohibit regulated firms from using or offering privacy-enhancing tools such as mixers and coin flippers that obscure transaction details.
In addition, algorithmic stablecoins like Ethena are not classified as stablecoins under the DIFC framework but are instead categorized as crypto tokens.
