Dubai's DIFC Cracks Down on Privacy Coins and Tightens Crypto Rules

Effective January 12, 2026, the Dubai Financial Services Authority (DFSA) has introduced significant changes to its Crypto Token Regulatory Framework, prohibiting privacy-focused cryptocurrencies like Monero (XMR) and Zcash (ZEC) within the Dubai International Financial Centre (DIFC). Trading, marketing, fund management, derivatives, and services employing anonymity-enhancing tools like cryptocurrency mixers (e.g., Tornado Cash) are all covered by this ban. The move solves risks to anti-money laundering (AML) compliance and worldwide sanctions standards, therefore bringing the DIFC into line with similar limitations already in effect under Dubai's mainland regulator VARA since 2023.

With only fiat-pegged coins backed by high-quality liquid assets meeting the definition of "fiat crypto tokens," stablecoin laws have also been dramatically tightened. This eliminates algorithmic stablecoins like DAI or Ethena's USDe, which are currently regarded as regular cryptocurrencies subject to more severe evaluations rather than having stablecoin status. Acknowledged compliant examples include USDC, EURC, and RLUSD, shifting more responsibility to licensed companies for guaranteeing reserve quality and redemption reliability during market turmoil.

Under a major process change, the DFSA has removed its centralized list of accepted tokens, thereby necessitating self-assessment and ongoing evaluation of the suitability of crypto assets provided by licensed entities. This change encourages flexibility and quicker innovation for compliant companies while strengthening general market integrity and investor protection in the DIFC, therefore positioning Dubai as a controlled but aspirational cryptocurrency hub that values transparency over anonymity.