The Dubai Financial Services Authority (DFSA) has announced the next phase of its Tokenisation Regulatory Sandbox, beginning engagement with firms selected to join its Innovation Testing Licence programme.
The DFSA, which regulates the Dubai International Financial Centre, allows entities to test financial products and services under a controlled environment through its regulatory sandbox.
The Authority launched its Innovation Testing Licence in 2017 and continues to build a market that aligns with the needs of traditional and non-traditional financial institutions, investors, and entrepreneurs, the authority said in a statement.
DFSA tokenisation Sandbox attracts interest from UK, EU, Canada, Singapore and Hong Kong
The DFSA introduced its Investment Token regime in 2021 to regulate tokens used as investment instruments. It implemented a Crypto Token regime in 2022 as a framework for classifying, recognising, and governing crypto tokens.
In June 2024, the DFSA refined its approach with amendments including streamlined token-recognition criteria and the first approvals of stablecoins.
The DFSA’s Tokenisation Regulatory Sandbox launched in March 2025 and received 96 expressions of interest from across the United Arab Emirates, United Kingdom, European Union, Canada, Singapore, and Hong Kong.
The expression of interest process provided the DFSA with insight into the diversity and maturity of tokenisation models being developed. Applications included proposals to tokenise financial assets and instruments, such as bonds including Islamic bonds or sukuk, units in a fund including money market funds and property funds, and the trading and safe custody of those assets.
The initiative attracted interest from established financial institutions exploring tokenisation use cases and start-ups looking to scale digital asset solutions in a regulated environment.
“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,” Charlotte Robins, Managing Director, Policy & Legal said.
Following a review, applicants were assessed based on their business model, clarity of use case, and readiness to test.
Some firms were invited into the sandbox for testing under the Innovation Testing Licence, while others were considered suitable for full authorisation under existing rules due to the maturity of their operations and experience in other regulated jurisdictions.
The DFSA will work with the firms selected for the Innovation Testing Licence to develop testing plans. Sandbox participants will begin trials within a controlled environment in the coming weeks.
The outcomes from this cohort will help inform regulatory policy and refinements to the DFSA’s digital assets and innovation frameworks.
The DFSA’s Tokenisation Regulatory Sandbox supports the DIFC’s position as a hub for digital finance and aligns with Dubai’s Economic Agenda D33, which aims to make Dubai one of the world’s top four financial hubs by 2033.
