Summary
- Dubai International Financial Centre (DIFC) said it has imposed an outright ban on privacy coins across the financial markets under its jurisdiction and has also tightened stablecoin regulation.
- It said the Dubai Financial Services Authority (DFSA) has implemented revised rules restricting the trading, promotion, fund inclusion and derivatives use of privacy tokens, as well as the use of mixers, tumblers and other privacy tools.
- It said the DFSA narrowed “fiat-referenced virtual assets” to tokens backed by high-quality, highly liquid assets and judged algorithmic stablecoins unlikely to meet the standards.
Dubai International Financial Centre (DIFC) has introduced an outright ban on privacy coins across the financial markets under its jurisdiction and has also further tightened regulation of stablecoins.
According to CoinDesk, a specialist media outlet for virtual assets (cryptocurrencies), the Dubai Financial Services Authority has implemented a revised “Crypto Token Regulatory Framework” that prohibits, across the DIFC, the trading and promotion of privacy tokens, their inclusion in funds, and their use in derivatives.
The DFSA concluded that privacy coins are structured to anonymize transaction histories and holders, creating conflicts with global norms on anti-money laundering and sanctions compliance. As a result, regulated firms are also restricted from using or providing privacy tools that obscure transaction information, such as mixers and tumblers.
The move comes as market interest in privacy coins has been expanding again. Recently, privacy coins such as Zcash (ZEC) and Monero (XMR) have drawn attention as trading volumes and price volatility have increased. The DFSA, however, said restrictions on the asset class are unavoidable to maintain alignment with international regulatory standards.
The definition of stablecoins has also been tightened. The DFSA limited the scope of “fiat-referenced virtual assets” to tokens that are pegged to fiat currencies and backed by high-quality, highly liquid assets capable of meeting redemption demands even under stress. Algorithmic stablecoins were deemed unlikely to meet the standards in terms of transparency and redemption structure.
The DFSA said the approach reflects the market’s maturity and strengthens consistency with global regulatory directions. The DIFC plans to reinforce a regulatory model that places clearer responsibility on financial firms for their asset selection and its outcomes, rather than pre-approving tokens.
