DFSA Initiates Engagement With Selected Firms For Tokenisation Regulatory Sandbox Programme

The Dubai Financial Services Authority (DFSA) has initiated the next phase of its Tokenisation Regulatory Sandbox. This involves engaging with firms selected for its Innovation Testing Licence programme, which allows entities to test new financial products in a controlled setting. The DFSA is committed to fostering innovation within the FinTech ecosystem, having launched this licence in 2017 to support both traditional and non-traditional financial institutions.

In March 2025, the DFSA introduced its Tokenisation Regulatory Sandbox, receiving 96 expressions of interest from regions including the UAE, UK, EU, Canada, Singapore, and Hong Kong. This initiative highlights the DFSA's dedication to responsible financial innovation within the Dubai International Financial Centre (DIFC). The sandbox aims to explore tokenisation as a transformative element in financial services.

The DFSA's approach includes an Investment Token regime launched in 2021 and an enhanced Crypto Token regime in 2022. These frameworks regulate tokens used as investment instruments and classify crypto tokens. In June 2024, further amendments were made to streamline token-recognition criteria and approve stablecoins, demonstrating the DFSA's commitment to adaptive innovation.

The expression of interest process provided insights into diverse tokenisation models worldwide. Applications included proposals for tokenising financial assets like bonds (including sukuk), fund units, and trading and custody of these assets. This reflects tokenisation's broad potential across the financial ecosystem. Both established institutions and start-ups showed strong interest in exploring tokenisation use cases.

Charlotte Robins, Managing Director of Policy & Legal at DFSA, stated: "The global interest in our Tokenisation Regulatory Sandbox signals the importance of, and growing appetite for, responsible innovation, and recognises the appeal of DFSA’s regulatory approach to innovation. As a regulator, our role is to support innovation and its positive contribution to the financial markets in ways that maintain market integrity and protect the public interest within the DIFC."

Selection Process

Applicants underwent a detailed review based on their business model clarity, use case readiness, and testing preparedness. Some firms were invited into the sandbox for live testing under the Innovation Testing Licence. Others were deemed suitable for full authorisation due to their operational maturity and experience in other regulated jurisdictions.

The DFSA will collaborate with selected firms to develop customised testing plans. Trials will commence soon within a controlled environment. The outcomes will inform future regulatory policies and potential updates to digital assets and broader innovation frameworks.

This initiative reinforces DFSA's commitment to enabling responsible innovation aligned with global best practices. It supports DIFC's status as a digital finance hub while aligning with Dubai’s Economic Agenda D33. This agenda aims for Dubai to become one of the top four global financial hubs by 2033.

With inputs from WAM