Tokenisation Regulation Advances with Dubai DIFC Sandbox

The Dubai Financial Services Authority has introduced a new tokenisation sandbox at the Dubai International Finance Centre as the region increases its focus on fintech growth.  

Approved firms can now test regulated investment products like equities, bonds, sukuk and fund units in tokenised form under an innovation testing licence. There's also a focus on Sharia-compliant innovation, especially for tokenised sukuk and Islamic funds. 

Notably, the Dubai Financial Services Authority (DFSA) sandbox is strictly for regulated financial instruments, keeping crypto assets and fiat-backed tokens out of scope to make the rules clearer.

Tokenisation regulation in the Middle East 

The new DFSA sandbox is a sign of wider regulatory momentum across the Middle East. It gives asset managers, banks and fintechs a safe place to experiment with digital products, build new ways of issuing and trading tokenised investments and work together with the regulator as new approaches take shape. Across the region, regulators are busy developing tokenisation through updates to federal laws and changes in free zone rules. Abu Dhabi Global Market (ADGM) brought in its virtual assets framework in 2018, which now includes digital securities, tokenised funds and market infrastructure. Bahrain’s Central Bank allows property and alternative lending tokenisation in its regulatory sandbox.

Although momentum is building, fund intermediaries still face different local requirements, alongside wider standards such as the EU’s MiCA and US SEC guidance.

Expert guidance for tokenisation

Tokenisation brings a range of benefits, from splitting asset ownership to speeding up settlements and broadening market access, plus more transparency thanks to blockchain technology. At the same time, new regulations mean compliance, cybersecurity, anti-money laundering checks and safeguarding investors have become more important than ever.

Anyone hoping to launch funds in the region will need expert legal advice on licensing, classification and distribution.

How the DIFC is shaping global tokenisation trends

With an open approach from regulators and frameworks built for innovation, the Middle East is now shaping global tokenisation trends and putting Dubai International Finance Centre (DIFC) and ADGM on the map as reliable hubs for institutional players and fintech growth.

It's an ideal time for clients to explore how tokenisation can boost product reach, unlock liquidity and engage more investors, all while keeping up with evolving rules.

How Ogier Global can support  

Our Dubai team can:  

• assist firms with obtaining licencing for issuing tokenised funds and securities 
• assist with building out governance frameworks for tokenised products 

• provide guidance on regulatory requirements 

As tokenisation transitions into regulated reality, early adopters can gain both valuable insights and a competitive edge.

To find out more, contact Praveer Pinto.

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice