Dubai has taken a firm stance on one of crypto’s most sensitive areas: anonymity. The Dubai Financial Services Authority (DFSA) has banned privacy-focused tokens such as Monero and Zcash from the Dubai International Financial Centre (DIFC), one of the world’s most attractive financial hubs for digital asset businesses. Alongside that move, the regulator has narrowed which stablecoins will be allowed, and shifted more responsibility onto firms to decide which tokens should be listed.
Rather than a small policy tweak, this marks a broader reset of Dubai’s Crypto Token Regulatory Framework. The focus is clear—stronger anti-money-laundering standards, more transparency, and less reliance on regulators to pre-approve individual assets.
Privacy coins shut out of the DIFC
Under the new rules, privacy tokens and privacy-enhancing tools such as mixers and tumblers are banned from trading, promotion, fund operations, or derivative activity inside the DIFC. That effectively blocks Monero and Zcash from the regulated market, even though both have recently drawn renewed attention from traders.
The DFSA’s rationale is based on compliance, not price action. Privacy tokens are designed to conceal transaction history and wallet identities. According to DFSA associate director Elizabeth Wallace, these features make it “nearly impossible” for firms to meet Financial Action Task Force (FATF) requirements, which demand identification of both senders and recipients in crypto transactions. If assets are built to break that transparency chain, the regulator argues, then most anti-money-laundering obligations cannot be satisfied.
Dubai’s stance mirrors a larger global pattern. Hong Kong technically allows privacy coins but places them under such strict conditions that listings are rare. The European Union has tightened the screws further through MiCA and upcoming limits on anonymous crypto activity. With Dubai’s explicit prohibition of mixers and other obfuscation tools, privacy-based assets are being pushed further toward the margins of regulated finance worldwide.
A stricter definition of “stablecoin”
Stablecoins form the second major pillar of the overhaul. The DFSA will now only treat fiat-backed tokens as “fiat crypto tokens”—its term for stablecoins. To qualify, they must be pegged to traditional currency and backed by high-quality, liquid reserves capable of handling redemption pressure.
Algorithmic stablecoins do not fit that description. Wallace noted that such designs are less transparent and make redemptions harder to assess. Ethena, a widely discussed algorithmic asset, would not be classed as a stablecoin in the DIFC. It isn’t banned, but it would simply be treated as a regular crypto token rather than a stablecoin.
Firms now shoulder more responsibility
Perhaps the most significant shift is governance. Instead of maintaining a DFSA whitelist of approved tokens, the regulator will require firms to conduct their own token assessments—before listing and on an ongoing basis. Companies must document why each asset is suitable for their platform and be prepared to defend that decision to supervisors.
This reflects a maturing market: regulators set the rules of the road, while exchanges and issuers carry the liability if they get it wrong. In Dubai, access to one of the world’s premier financial centers will increasingly depend on how well firms manage compliance, traceability, and risk.
The message to the industry is clear. Privacy coins and opaque algorithmic designs may still exist—but their place inside heavily regulated environments is shrinking. Inside the DIFC, the future of crypto belongs to assets that can be traced, explained, and supervised.
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