Dubai’s DFSA bans privacy tokens such as Monero and Zcash, tightens stablecoin rules and lets companies, not regulators, decide which tokens can be listed in the DIFC.
Summary
- DFSA bans privacy tokens and mixers in the DIFC, blocking Monero and Zcash from regulated trading, funds and derivatives.
- Stablecoins are being redefined as fiat-backed ‘fiat crypto tokens’, with the exception of algorithmic designs such as the stablecoin label’s Ethena.
- Token approvals are shifting from a DFSA whitelist to company-led eligibility checks, increasing the compliance stakes for exchanges and issuers.
Dubai’s top financial regulator has drawn a clear line among privacy-focused cryptocurrencies, banning privacy tokens in the Dubai International Financial Center (DIFC) while limiting which stablecoins are allowed in one of the industry’s most coveted hubs.
The movement folds into a broader reset of the emirate’s Crypto Token Regulatory Framework, which puts the responsibility for vetting tokens on companies and elevates global anti-money laundering standards above asset-level permissions.
Dubai bans privacy-related coins and redefines stablecoins
Under the updated rules, the Dubai Financial Services Authority (DFSA) bans trading, promotion, fund activities and derivatives linked to privacy tokens in or from the DIFC, closing the door to assets such as monero and zcash at the regulated level even as market interest in them has increased. Monero hit a record high on Monday, while zcash has seen renewed speculative flows, underscoring a familiar pattern: retail enthusiasm is rising just as policymakers are tightening limits.
For the DFSA, it is less about timing than about architecture. “Privacy tokensPRivAcyTOkeNS have features to hide and anonymize transaction history as well as holders,” said Elizabeth Wallace, associate director for policy and legal affairs at the DFSA. “It is almost impossible for companies to comply with the Financial Action Task Force requirements if they trade or hold privacy tokens.” FATF requires companies to identify the originator and beneficiary of crypto transactions; According to Wallace, most privacy coins break that chain by design. “Meet most anti-money laundering requirements money and financial crime would not be met if you were concerned with privacy tokens,” she added.
Dubai does not act in isolation. Hong Kong still “in theory” allows privacy tokens under a risk-based licensing regime, but burdensome listing conditions have effectively kept them out of the market, while the European Union has gone further by using MiCA and an upcoming ban on anonymous crypto activity to squeeze mixers and privacy coins out of regulated circulation. Against this backdrop, Dubai’s outright ban on privacy devices such as mixers, cups and other obfuscation devices fits neatly into a global pattern in which the price of access to mainstream capital is full traceability.
Stablecoins are the second pillar of the reset. The DFSA has tightened the so-called ‘fiat crypto tokens’, with the label reserved for instruments pegged to fiat and backed by high-quality, liquid assets capable of withstanding redemptions during periods of stress. “Things like algorithmic stablecoins are a little less transparent about how they work and how they can be redeemed,” Wallace said, aligning Dubai with regulators who have grown wary of opaque collateral and reflexive settlement dynamics. Ethena, one of the most prominent algorithmic stablecoins, would not qualify as a stablecoin under the DIFC’s interpretation, although it is not banned outright. “In our regime, Ethena would not be considered a stablecoin,” Wallace said. “It would be considered a crypto token.”
The subtler and perhaps more consequential change lies in who decides what goes on the list. Rather than publishing a centralized whitelist of approved tokens, the DFSA will now require companies to conduct, document and continually review their own suitability assessments for each asset they offer. “The feedback from companies was that the market had evolved,” Wallace said. “They themselves have evolved and become more comfortable with the regulation of financial services, and they want the ability to make that decision for themselves.”
This corporate-led model reflects a broader trend among major regulators: Regulators provide the guardrails, but shift the liability for poor judgment squarely onto platforms and intermediaries. In the case of Dubai, the message is blunt. The future of Crypto within a global financial center belongs to companies that can explain, defend and monitor their listings, while regulators focus less on blessing individual tokens and more on enforcing a regime in which traceability, accountability and compliance are non-negotiable. For issuers of privacy coins and algorithmic stablecoins, the DIFC door is not just closing; it is being redesigned around a different idea of what “acceptable” crypto should look like in a post-FTX, post-MiCA market cycle.
