DFSA’s March 2025 Amendments to Financial Legislation

The Riffle

The Dubai Financial Services Authority (DFSA) has issued a comprehensive set of amendments to its Rulebook, coming into effect on 1 January 2026, following a consultation process. These updates cover the Conduct of Business (COB), Auditor (AUD), General (GEN), Markets (MKT), and Glossary (GLO) Modules. The amendments reflect the DFSA’s strategic focus on enhanced regulation of Client Assets, including Crypto Tokens, tighter auditor oversight, and greater disclosure obligations for regulated firms.

Key Changes:

1. Conduct of Business (COB) Module:

• Inclusion of Crypto Tokens as Client Assets: Explicit recognition of “Client Crypto Tokens” introduces new safeguarding and custody requirements.

• Expanded Auditor Requirements: Introduction of the Safe Custody Crypto Token Auditor’s Report.

• Clarification on Asset Control: Detailed definitions of what it means for a firm to hold or control Client Assets.

• New Rules for Money Services Firms: Application of client asset rules to money services, including “Stored Value.”

• Updated Client Money and Custody Rules: Enhancements to segregation, reconciliation, and disclosure practices for both fiat and digital assets.

• Stronger Client Disclosures: Mandatory updates on asset protection, insolvency scenarios, and third-party custodians.

2. Auditor (AUD) Module:

• New Audit Reports:

  • Safe Custody Crypto Token Auditor’s Report

  • Money Services Auditor’s Report

• Enhanced Reporting Requirements: Updates to existing audit report structures to reflect the inclusion of crypto-related services and obligations.

3. General (GEN) Module:

• Licensing Clarification: Requirement for an endorsement to hold or control Client Assets.

• Inclusion of New Audit Reports: GEN 8.6 updated to reference crypto custody and money services audits.

• Transitional Rules for Crypto Tokens: Phased implementation guidance for firms during the transition period.

4. Markets (MKT) Module:

• Auditing Standards Affirmation: Reinforces ISA compliance for listed entities with minor clarifications.

5. Glossary (GLO) Module:

• Updated Definitions: Addition of terms like “Safe Custody Crypto Token” and updates to existing report references.

Next Steps:

1. Review the updated Rulebook on the DFSA’s official website.

2. Assess operational impact of these changes on your firm’s compliance and reporting structures.

3. Update internal systems, controls, and documentation to align with the new requirements.

4. Engage with your auditors early to prepare for the new reporting obligations.

5. Revise client-facing materials to meet enhanced disclosure requirements by 1 January 2026.

Summary:

The March 2025 DFSA amendments represent a proactive shift toward greater transparency, accountability, and client asset protection, particularly in light of evolving crypto asset activity and money service functions. The regulatory burden increases, but so does the clarity and robustness of the DIFC framework. Firms must act promptly to adapt systems, engage auditors, and prepare clients for the forthcoming changes.

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