Dubai Financial Services Authority (DFSA), the regulatory arm of DIFC ( Dubai International Financial Centre) has announced the launch its tokenization regulatory sandbox.
The tokenization regulatory sandbox (TRS), which has two stages: the innovation testing license (ITL) under the tokenization cohort and a DFSA license to enter the program.
As per the press release, the regime asked firms to submit their expression of interest before April 24, 2025.
The tokenization regulatory sandbox will allow firms to test innovative products and services in a controlled environment. The sandbox will also provide an opportunity for firms to test tokenized financial solutions.
It will offer a regulatory pathway from experimentation to full authorization.
The DFSA’s innovation testing license has already been instrumental in supporting fintechs and digital finance pioneers in the DIFC. It will now expand its scope to tokenized investments.
As per the guidelines set by the DFSA, firms who are engaged in the tokenization of financial services such as trading, holding or settling tokenized investments like equities, bonds, sukuk, and collective investment fund units can express their interest in joining.
Additionally, existing DFSA-authorized firms who want to expand into the tokenization field can also apply.
Firms are required to have a strong understanding of the legal and regulatory requirements.
Interested firms will undergo an assessment process, and those that demonstrate strong business models and regulatory understanding may be invited to participate in the DFSA’s tokenization regulatory sandbox, where they will receive tailored regulatory support and structured testing opportunities, under what is called the ITL tokenization cohort.
The ITL tokenization cohort is the DFSA’s version of a regulatory “sandbox” focused on tokenization-related activities.
The announcement comes as more and more tokenization projects flourish in the UAE, with examples including Mantra Blockchain’s recent partnership with DAMAC Holdings to tokenize $1 billion worth of assets.
Additionally, other countries across the GCC and MENA region, such as Qatar have already made great strides with their tokenization and digital asset regulations and labs.
Stobox founder in a recent interview in Cryptopolitan noted that the MENA tokenization market could account for as much as 20% of the expected $30 trillion tokenization market by 2030. Stobox, was one of the 29 blockchain firms that have been accepted into Qatar Financial Centre’s Digital Assets Lab. Ross Shemeliak, the co-founder of the firm, noted that tokenization is taking the world and MENA region by storm.
