The Dubai Financial Services Authority (DFSA) has formally dismantled its central Recognized Crypto Token list, shifting responsibility for crypto token suitability squarely onto regulated firms in a structural reset that liberalizes market access while sharply increasing firm-level liability, according to a disclosure. The new rules have taken effect as of yesterday.

ICYMI- The move follows a consultation paper issued last October, which proposed shifting responsibility for determining whether tokens are suitable for use in the Dubai International Financial Center (DIFC) away from the regulator onto firms.

How did it work before — and how will it work now? Previously, the regulator curated and held a list of approved tokens, but now firms can only engage with tokens they have internally assessed as suitable. Fiat-referenced crypto tokens remain subject toDFSA-level scrutiny under a separate policy framework.

Who should do what: Boards and senior management are now directly accountable for conducting and documenting due diligence on the provenance and governance of a token, its status in other jurisdictions and whether other regulators have greenlit it, its liquidating and trading activity, and general compliance with DFSA legislation.

Funds rules have also been materially loosened: The DFSA has removed thresholds and structural restrictions on the amount funds can invest in crypto tokens, provided managers carry out appropriate suitability assessments and apply robust risk, custody, and disclosure controls, opening the door for significantly higher crypto exposure for investors.

Safeguards tighten as flexibility expands: Firms are now required to maintain ongoing monitoring and reporting obligations, though it’s not clear exactly how often they are required to file returns. The consultation paper had proposed monthly returns, with fixed penalties for late filings.

Implemented largely as proposed: While the main proposals of shifting responsibility and fund liberalization went ahead, the new updates stopped short of specifying a fixed reporting frequency, as opposed to the monthly requirement proposed in the consultation paper. The DFSA described the reporting obligations instead as “proportional” and “risk-based,” but did provide suitability guidelines.

Why it matters

This is a decisive transfer of risk and responsibility. The responsibility shift increases operational burden and exposure for firms, but allows more flexibility for crypto exposure and investments. For the DIFC, the move aligns the regime more closely with global regulatory approaches that favor principles-based oversight over prescriptive asset lists.

What’s next

Timeline: The consultation paper had said that tokens previously recognized by the DFSA were set to remain suitable for a limited transition period, noting that firms must complete and document their own suitability assessments by 12 April, after which the DFSA’s recognized list will fall away entirely.

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