Dubai Bans Privacy Tokens and Tightens Stablecoin Rules in Regulatory Overhaul
The Dubai Financial Services Authority announced the prohibition Sunday, with new rules taking effect January 12.
Quick overview
- Dubai has banned privacy tokens like Monero and Zcash within its Dubai International Financial Centre, effective January 12.
- The Dubai Financial Services Authority cited challenges in anti-money laundering compliance as a reason for the prohibition.
- Regulatory responsibilities for token approval have shifted from the DFSA to individual licensed firms, increasing their compliance burden.
- Dubai aims to maintain its status as a crypto-friendly hub while ensuring that risky or opaque products are excluded from regulated markets.
Dubai just banned privacy tokens within its Dubai International Financial Centre. The Dubai Financial Services Authority announced the prohibition Sunday, with new rules taking effect January 12. The changes mark one of Dubai’s most aggressive regulatory steps yet.
The DFSA prohibited trading, promoting, or offering derivatives involving privacy tokens like Monero and Zcash in or from the DIFC. The regulator also banned mixers, tumblers, and other tools that obscure crypto transaction data.
Elizabeth Wallace, DFSA associate director, said privacy tokens make AML compliance nearly impossible. “It’s nearly impossible to comply if trading privacy tokens,” Wallace stated. The Financial Action Task Force requires firms to identify both parties in each transaction, which privacy tokens by design prevent.
The ban applies to all licensed entities under DFSA supervision. Unlike Dubai, Hong Kong permits privacy tokens under strict licensing requirements. The EU is also cracking down through MiCA and upcoming anti-anonymity regulations.
Dubai also redefined stablecoins under tighter criteria. The DFSA now calls them “Fiat Crypto Tokens” and limits the category to those backed by high-quality liquid assets tied to fiat currency reserves. These tokens must be able to fulfill redemptions even under market stress.
Algorithmic stablecoins like Ethena don’t meet the new requirements. “In our regime, Ethena wouldn’t be considered a stablecoin,” Wallace confirmed. The token would fall under general crypto assets instead. That doesn’t mean they’re banned—firms can still offer them as long as they disclose the risks.
The regulatory update shifts token approval responsibilities from DFSA to individual licensed firms. Companies now have to assess and approve which crypto tokens they offer, replacing the regulator’s previous approved list. This puts compliance burden directly on exchanges and platforms.
Firms operating in the DIFC will need to review their product lineups. Platforms that listed privacy tokens must delist them or restrict access. The changes could raise compliance costs, but regulators believe it’ll strengthen trust among institutional participants.
Dubai positioned itself as a crypto-friendly hub by attracting exchanges, startups, and institutional players through clear licensing. But regulators consistently said openness to innovation doesn’t mean zero oversight. These rules show Dubai wants controlled growth where risky or opaque products stay out of regulated markets.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
Save