DFSA Bans Privacy Tokens and Refines Stablecoin Rules in DIFC

Key Insights:

• DFSA banned privacy tokens and devices for DIFC financial services, promotions, public offers, funds, and derivatives in new crypto regulations.
• Firms must assess crypto token suitability themselves; DFSA will no longer publish a Recognized Crypto Tokens list.
• DFSA webinar on DIFC digital assets rules is scheduled for 27 January 2026.

Dubai’s DFSA updated crypto regulations on January 12, 2026. The rules apply within the DIFC. The regulator has now put them into force.

The changes include a prohibition on privacy-focused crypto assets and related anonymizing tools for regulated activity in or from the DIFC.

The DFSA’s General Module (GEN) now bars regulated activity tied to privacy tokens. It also bars the use of a privacy device in or from the DIFC.

The rule applies at the framework level rather than naming specific coins. It focuses on features that hide identities or prevent transaction tracing.

The DFSA defines privacy tools in its rulebook guidance. It says they support anonymity on blockchain networks. It adds they enable non-traceability under crypto regulation.

The DFSA states that this category is prohibited. That’s because it can enable financial crimes such as money laundering, market abuse, fraud, or related misconduct.

The DFSA issued GEN 3A.2.2. It bans financial services tied to privacy tokens. It also prohibits services involving privacy devices in or from the DIFC.

The restriction also extends to making or approving a financial promotion related to these assets or tools. The DFSA rule also prohibits the offering of privacy tokens to the public. It restricts fund activity when a fund invests in such tokens.

The DFSA rule also applies to derivatives tied to privacy tokens. It blocks DIFC-based services linked to such instruments.

Alongside the privacy-token ban, the DFSA has moved to a firm-led model for assessing whether crypto tokens meet DFSA suitability criteria.

Firms are required to make a reasoned, documented assessment of tokens they engage with. Also, the DFSA says it will no longer publish a list of recognized crypto tokens.

The updated GEN provisions set suitability rules for crypto tokens. They cover financial services, promotions, public offers, fund exposure, and derivatives.

Also, the rulebook outlines factors firms should consider for non-fiat crypto tokens. These include the token’s features and its regulatory status in other jurisdictions.

It also covers market size and liquidity, plus the underlying technology. Firms must assess token use carefully. They should check if it complicates compliance with DFSA rules. This step is vital under crypto regulation.

Furthermore, Fiat Crypto Tokens are still distinguished from other cryptocurrency tokens in the DFSA rulebook. The GEN framework links the satisfaction of DFSA suitability to their application.

The rulebook sets limits on Algorithmic Tokens. It bans DIFC activities using tokens that change supply with algorithms. It outlaws efforts to stabilize price through such mechanisms.

The DFSA will host a digital assets webinar on January 27, 2026. It aims to explain the updated framework. The session will cover the regulator’s approach to crypto regulation.

This will include how the regime evolved and how the DIFC ecosystem supports regulated digital-asset activity. The DFSA said the updates follow an October 2025 consultation process on enhancements to the crypto token regime.

More so, recent crypto regulation news outlined that U.S. regulators are moving toward closer SEC–CFTC coordination this year. SEC Chair Paul Atkins stated that the Commission anticipates considering a token taxonomy. He also described “Project Crypto” as part of its digital-asset agenda.

A joint CFTC–SEC staff statement also framed cross-agency work on pathways for trading certain spot crypto asset products.

Reports said the Fed injected $2.5 billion into the banking system. It did so through an overnight repo operation. The move came during late-December funding conditions.

The post DIFC Crypto Regulations: DFSA Bans Privacy Tokens & Refines Stablecoins appeared first on The Market Periodical.