Dubai will ban privacy tokens and tighten stablecoin regulations, with the new regulatory framework taking effect on January 12.

DeepFlowTech · 2026-01-12T09:44:45+00:00

The Dubai Financial Services Authority has banned privacy tokens due to non-compliance with global regulatory standards and the risk of money laundering. The new cryptocurrency regulatory framework has come into effect, transferring approval responsibilities and tightening the definition of stablecoins, prohibiting the use of privacy tools. Some algorithmic stablecoins have been reclassified as cryptocurrencies.

DeepFlowTech

2026-01-12 09:44:45

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Deep Tide TechFlow News, January 12 — According to CoinDesk, the Dubai Financial Services Authority (DFSA) has fully banned privacy tokens within the Dubai International Financial Centre (DIFC), citing that such assets are incompatible with global compliance standards and pose money laundering and sanctions compliance risks.

The updated cryptocurrency regulatory framework took effect on January 12, shifting token approval responsibilities to enterprises and tightening the definition of stablecoins. The DFSA limits the category of “legal cryptocurrencies” to tokens pegged to fiat currency and backed by high-quality liquid assets, capable of meeting redemption demands during market stress.

Elizabeth Wallace, Deputy Director of Policy and Legal at the DFSA, stated that privacy tokens have the ability to hide transaction history and holders, making it nearly impossible for enterprises to comply with the Financial Action Task Force (FATF) requirements. The new regulations also prohibit regulated entities from using or providing privacy tools such as mixers and tumblers that conceal transaction details.

Additionally, algorithmic stablecoins like Ethena are not considered stablecoins under the DIFC framework but are classified as cryptocurrencies.

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