Dubai’s DFSA Bars Privacy Tokens, Tightens Stablecoin Framework

Dubai’s financial regulator for the Dubai International Financial Centre (DIFC) has prohibited the use of privacy-focused crypto assets and introduced stricter rules for stablecoins as part of a broader refresh of its digital asset regime, CoinDesk reports.

The changes were implemented through amendments to the DFSA’s Crypto Token regulatory framework, which took effect on Jan. 12, 2026.

Privacy tokens barred over compliance risks

Under the updated framework, privacy-enhancing tokens are no longer permitted across the DIFC. The Dubai Financial Services Authority (DFSA) cited elevated risks tied to anti-money laundering (AML) controls and sanctions compliance, placing privacy coins in a category considered incompatible with globally aligned financial oversight standards.

Stablecoin definition narrowed to high-quality backing

Stablecoins are another key focus of the new rule set. The DFSA tightened the definition of what it classifies as Fiat Crypto Tokens, restricting the label to stablecoins pegged to fiat currencies and backed by high-quality, liquid assets designed to meet redemption demands during stress conditions.

Firms now responsible for token suitability

In a significant shift from prior practice, the DFSA is moving away from maintaining a regulator-issued list of approved tokens. Instead, licensed firms operating in the DIFC must now assess whether specific crypto tokens are suitable to be offered, document their decision-making, and conduct ongoing reviews.

The DFSA’s updated approach indicates a regulatory posture focused less on asset-by-asset approval and more on aligning market activity with international compliance expectations and investor safeguards.

What is the DFSA?

The Dubai Financial Services Authority (DFSA) is the independent regulator overseeing financial services within the DIFC, Dubai’s financial free zone. Its mandate includes supervision of banking, securities, asset management, insurance, and capital markets activity, as well as enforcing AML and counter-terrorist financing requirements inside the DIFC.