DFSA Bans Privacy Tokens and Overhauls Stablecoin Rules

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pivx20 days agoPeakD2 min read

The Dubai Financial Services Authority (DFSA) has officially prohibited the use of privacy-focused cryptocurrencies and implemented rigorous new standards for stablecoins within its International Financial Centre.

For years, Dubai has been the North Star for crypto enthusiasts, an oasis of innovation where digital assets were welcomed with open arms. But as of January 12, 2026, the golden gates have swung shut on privacy coins.

This ban effectively outlaws privacy-centric tokens like Monero and Zcash, which were designed to protect user identities and transaction histories. The DFSA believes that the core features of these assets are fundamentally at odds with international standards for anti-money laundering and the prevention of terrorism financing.

The ban also makes it illegal for regulated firms to facilitate trades, provide custody services, or market these assets within the free zone. Furthermore, it extends to other privacy tools, strictly forbidding the use of mixers, tumblers, and services designed to obscure the digital paper trail.

In addition to the crackdown on private tokens, the DFSA has introduced a new “Policy Statement on Fiat Crypto Tokens” to tighten the definition and oversight of stablecoins. Under these new rules, an asset is only recognized as a legitimate fiat crypto token if it is pegged to a fiat currency and backed 1:1 by high-quality, liquid reserve assets.

This shift effectively sidelines algorithmic stablecoins. While they are not explicitly banned, they have been stripped of their stablecoin status and reclassified as high-risk crypto tokens, subjecting them to much more stringent suitability requirements and oversight.

A significant structural change in this reset is the removal of the “Recognized Crypto Tokens” list. Previously, firms relied on a pre-approved registry from the regulator to determine which assets were safe to trade. Now, the DFSA has shifted to a principles-based model where the burden of proof lies with the companies themselves.

Firms must now perform and document their own comprehensive due diligence to ensure that any token they handle does not possess hidden anonymity-enhancing features or violate the new transparency mandates.

Written by Clement Saudu