DIFC Innovation: DFSA Engages Firms in Tokenisation Sandbox

The Dubai Financial Services Authority (DFSA), the autonomous financial regulator of the Dubai International Financial Centre (DIFC), has announced the latest development in its ongoing efforts to foster innovation through its Tokenisation Regulatory Sandbox. This new phase marks the beginning of formal engagement with a cohort of firms chosen to participate in its Innovation Testing Licence programme. This framework allows approved participants to trial emerging financial technologies in a closely monitored and regulated environment.

Driving FinTech Growth through Innovation

Since launching the Innovation Testing Licence in 2017, the DFSA has consistently positioned itself as a pioneer in the financial regulatory space, championing innovation and adaptability. With a forward-thinking mandate, the Authority remains committed to nurturing an ecosystem where both traditional institutions and cutting-edge start-ups can explore and scale novel financial solutions. This proactive approach is integral to building a financial marketplace that reflects the evolving demands of a diverse investor and entrepreneur base.

From Investment Tokens to Stablecoins: A Regulatory Evolution

The DFSA has introduced several landmark regulatory frameworks over the years to keep pace with emerging digital asset trends. In 2021, it rolled out a dedicated Investment Token regime, the first of its kind, providing structure and clarity around the use of tokens as investment tools. A year later, the Authority expanded this initiative by establishing a Crypto Token regime, aimed at defining and governing various forms of crypto assets. Most recently, in June 2024, the DFSA refined its approach further by simplifying token recognition processes and approving stablecoins, reinforcing its commitment to innovation underpinned by clear and responsible regulation.

Global Interest in Tokenisation Grows

Building on this strong regulatory foundation, the DFSA launched its Tokenisation Regulatory Sandbox in March 2025, drawing significant international interest. The initiative attracted 96 expressions of interest from jurisdictions including the UAE, UK, EU, Canada, Singapore, and Hong Kong. The sandbox represents a significant stride in enabling responsible experimentation in financial tokenisation, further cementing the DIFC’s role as a hub for digital finance and innovation.

Exploring a Spectrum of Tokenisation Use Cases

The applications received offered the DFSA a unique view into the diversity of tokenisation strategies being developed worldwide. Firms proposed a wide range of asset tokenisation models, including the digital representation of bonds, Islamic sukuk, fund units (such as property or money market funds), and associated services like trading and custody. These submissions highlight the wide-ranging impact tokenisation could have on transforming capital markets and asset management practices.

Blending Established Finance with Emerging Start-ups

Interest in the sandbox spanned both seasoned financial entities and rising tech start-ups. While traditional players are exploring tokenisation to improve efficiency and accessibility, start-ups are seizing the opportunity to test and refine novel digital asset models within a structured regulatory framework. This confluence of experience and experimentation creates fertile ground for meaningful innovation in financial services.

Speaking at the DFSA’s Policy & Legal Roundtable, Charlotte Robins, Managing Director, Policy & Legal, said: “The global interest in our Tokenisation Regulatory Sandbox signals the importance of, and growing appetite for, responsible innovation, and recognises the appeal of DFSA’s regulatory approach to innovation. As a regulator, our role is to support innovation and its positive contribution to the financial markets in ways that maintain market integrity and protect the public interest within the DIFC. By working closely with local and global firms through the sandbox, we are encouraging responsible innovation and helping to ensure that new ideas are tested against regulatory expectations.”

Rigorous Evaluation and Strategic Selection

Each applicant underwent a rigorous evaluation, focused on the clarity of their proposed use case, their operational readiness, and the strength of their underlying business model. Following this process, some were invited to participate directly in the sandbox for real-time testing under the Innovation Testing Licence. Others, whose operations demonstrated sufficient maturity and compliance experience in other regulated jurisdictions, were deemed ready for full authorisation under existing DFSA rules.

Preparing for Real-World Trials

The DFSA is now collaborating closely with selected firms to design tailored testing plans that reflect their specific technologies and objectives. Within the coming weeks, participants will commence live trials in a supervised environment, generating valuable data and insights. These findings will not only guide the evolution of the DFSA’s digital asset policies but also influence the broader regulatory landscape within the DIFC and beyond.

A Strategic Commitment to Responsible Innovation

This initiative reflects the DFSA’s broader mission to enable safe, structured innovation in alignment with international best practices. The Tokenisation Regulatory Sandbox reinforces Dubai’s ambition, under the Economic Agenda D33, to rank among the world’s top four global financial centres by 2033. By marrying innovation with accountability, the DFSA continues to strengthen the DIFC’s status as a leader in digital finance and a model for other regulatory jurisdictions worldwide.