In the United Arab Emirates, the policies of the government support the widespread growth of cryptocurrency. The new crypto token rules will benefit both cryptos users and investors. This is why Dubai and Abu Dhabi are some of the world’s most crypto-friendly cities. In recent times, the crypto regulator DFSA revised its token regime to reflect changes from Consultation Paper 153. These new amendments were made since the DFSA noted that this fee is excessively high.
Major Reasons Behind the New Updated Crypto Token Rules
The DFSA has given many reasons behind their new updated crypto token rules. It will be in the best interest of crypto users to highlight those reasons.
Changing Stablecoin Criteria and Token Recognition Fees
The application fee was $10,000 for each token before the amendments. The DFSA rightly realized that this fee was just too exorbitant. Therefore, to provide respite to new firms seeking recognition for multiple tokens. The regulator decreased the fees by $5000 and introduced additional recognition criteria for stablecoins. The proposal does not mean a relaxation of approach.
Fostering of Innovation
DFSA also stated that the updates are to foster innovation. The innovation will have a balanced approach in the development of the regime. The changes will affect market developments and recommendations from international standard setters. These will also depend on the supervisory experience of regulators. The other major change is that it will allow domestic qualified investor funds to invest in unrecognized tokens and the exposure must not exceed 10% of the fund’s Gross Asset Value (GAV).
Restriction on Fund Activities Lifted
The external and foreign funds investing in crypto tokens could not be funded in earlier times because the DFSA had placed restrictions. Now, the amendment will positively affect the ability to offer external and foreign funds investing in cryptocurrencies. The current regulatory approach before the amendments was excessively tedious and strict. These limitations would have harmed the interests of those who had crypto tokens. Now, the DFSA has recognized five crypto tokens such as Bitcoin, Ethereum, Litecoin, XRP, and Toncoin.
Also Read- Cryptocurrencies and the Future of Money
Conclusion
The DFSA has taken major strides by amending crypto token rules to popularize decentralized finance. In the long run, it will have a positive impact on crypto users of all types. The token rules will allow the country to remain the most crypto-friendly country in the world, with both Dubai and Abu Dhabi being the prominent cities. These amendments will also attract more crypto investment as it will boost the confidence levels of most new investors. Overall, the government has once again made its intention clear that it wants to favor cryptos.
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