DFSA advances tokenisation push with next phase of regulatory sandbox

The Dubai Financial Services Authority (DFSA), the independent regulator of the Dubai International Financial Centre (DIFC), has launched the next phase of its Tokenisation Regulatory Sandbox, marking a significant step in its push to support responsible innovation in financial services.

The DFSA has begun engaging with firms selected for its Innovation Testing Licence (ITL) programme, a sandbox environment that allows financial entities to trial new technologies under regulatory oversight. The initiative aims to test the real-world application of tokenisation in capital markets and other financial sectors.

Since launching the sandbox in March 2025, the DFSA has received 96 expressions of interest from firms across the UAE, UK, EU, Canada, Singapore, and Hong Kong. Applicants included major financial institutions and start-ups exploring use cases such as tokenised bonds (including sukuk), fund units, and custody solutions.

Speaking at the DFSA’s Policy & Legal Roundtable, Charlotte Robins, Managing Director of Policy & Legal, said the global interest in the sandbox "signals the importance of, and growing appetite for, responsible innovation," and highlights confidence in the DFSA’s regulatory model. She added, “As a regulator, our role is to support innovation in ways that maintain market integrity and protect public interest within the DIFC.”

The sandbox initiative builds on earlier digital asset frameworks introduced by the DFSA. In 2021, it launched a regime for investment tokens, followed in 2022 by a comprehensive Crypto Token framework. In June 2024, the authority introduced further amendments, including simplified token-recognition criteria and the first approval of stablecoins, demonstrating a continuous commitment to regulatory adaptability.

Firms selected for the ITL programme will now co-develop customised testing plans with the DFSA, with live trials set to begin in the coming weeks. Outcomes from the sandbox cohort are expected to shape future policy on tokenisation and broader digital finance regulation.

The initiative aligns with Dubai’s Economic Agenda D33, which aims to position the city among the world’s top four global financial hubs by 2033. By promoting safe, transparent, and forward-looking regulation, the DFSA seeks to consolidate the DIFC’s role as a leading centre for fintech and digital innovation.