The Feedback Statement was issued to explain the final rules, conclusions, and changes made to the initial March 2022 proposal. The rules discussed in the Statement commence from 1 November 2022.
Token Taxonomy clarifications:
With the exception of the Central Bank Digital Currencies (CBDCs), the token taxonomy remains largely unchanged from the original consultation paper.
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Recognised Crypto Tokens |
Financial Services and activities can be carried on in relation to Crypto Tokens that are recognised. DFSA will put on their website an initial list of Recognised Tokens. This means that these Tokens will not need to go through separate recognition via the formal recognition process. |
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Recognised Fiat Crypto Tokens |
Financial Services and activities can be carried on in relation to Fiat Crypto Tokens that are recognised. |
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Prohibited Tokens
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Carrying on any financial service or other activity with Prohibited Tokens (Privacy Tokens or Algorithmic Tokens) is strictly prohibited. |
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Unrecognised Crypto Tokens |
Crypto Tokens that have not been assessed and recognised by the DFSA as meeting the recognition criteria. Activities with these tokens are Prohibited besides the provision of custody, by an appropriately licensed Authorised Firm. |
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Derecognised Crypto Tokens |
Crypto Tokens whose recognition status has been revoked by the DFSA due to the Crypto Token no longer meeting the recognition criteria. Activities with these tokens are prohibited besides the provision of custody, by an appropriately licensed Authorised Firm. |
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Excluded Token
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Non-Fungible Token (NFT) and Utility Tokes (UTs) are excluded, except for:
Central Bank Digital Currency |
Financial service activities clarifications:
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DIFC incorporation |
Firms providing services in Crypto. Tokens need be fully incorporated in the DIFC except for: Branch firms in the DIFC related to crypto, who are already operating as a branch of a foreign financial institution before the commencement of the new regime, may continue to operate as a branch. Technology firms will need to demonstrate to us that they are not providing a financial service by way of business. |
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Funds |
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Miscellaneous Requirements:
- Client classification:
When determining the monetary threshold for Professional Client status, DFSA have softened the haircut from 80% down to 66% of the market value of the Crypto Token, however, only Recognised Crypto Tokens will count towards the net asset test.
- Transitional arrangement:
Authorised Persons in the DIFC who have already been engaging in Crypto Token activities will be given six-month transitional period to have the correct permissions and license from the DFSA. The grace period will commence on the date when the rules come into force being 1 November 2022.
How Apex can help
- CO/MLRO-(Crypto-VA)
- Crypto AML & CO Oversight Support Services
- Crypto-assets due diligence services
- Crypto/Virtual asset/ VASP-CASP licensing
- Crypto/ VA and blockchain Training
- VASP/CASP Due Diligence
- Crypto AML business risk assessment templates
