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The Dubai Financial Services Authority (DFSA) has announced that Circle’s USDC and EURC have become the first stablecoins to be recognised under the emirate’s crypto-asset framework.
Last week, the DFSA recognised the two stablecoins with immediate effect, meaning that USDC and EURC may now be offered to customers in the Dubai International Financial Centre (DIFC).
With this approval, financial institutions and fintechs operating in the DIFC can transact in USDC and EURC for payments, treasury management and other use cases.
Circle said the Dubai approval builds on its position as the first and only major global stablecoin issuer to comply with the EU’s Markets in Crypto-Assets (MiCA) regulation and with Canada’s new listing rules.
Dante Disparte, chief strategy officer and head of global policy at Circle, said the approval supports Circle’s efforts to make digital dollars and euros “more accessible to businesses and financial institutions worldwide”.
Dubai offers flexibility to global stablecoin issuers
In November 2022, the DFSA introduced the Regulation of Crypto Tokens, a framework intended to foster responsible and transparent innovation while maintaining regulatory standards and objectives.
The regulation addresses a range of risks associated with the sector, including those related to money laundering and financial crime, consumer protection, technology governance, custody and exchange operations.
Under its crypto token recognition rules, the DFSA may recognise a crypto token if it has already been approved for use by a regulator in another recognised jurisdiction.
The DFSA’s list of recognised jurisdictions currently includes the EU, the US, the UK, Australia, Hong Kong, Singapore, India and several other countries and territories.
However, if the token is a stablecoin, it must also conform to specific requirements overseen by the DFSA.
For example, stablecoins must be backed at least one-to-one at all times; reserve assets must be valued daily, held in segregated accounts in approved jurisdictions and must be “highly liquid” with “minimal credit risk”.
Issuers must also publish information demonstrating that their stablecoin reserves meet the DFSA’s criteria at least monthly, and this information must be verified by a qualified third party.
Finally, issuers must nominate a person who is “clearly responsible” and “liable to investors”, who must also sign off on reserve asset attestations.
Stablecoin issuers seeking to have their tokens recognised must pay an application fee of $10,000 and a service fee of $5,000 to the DFSA.
