What it is
The Innovation Testing Licence (ITL) Programme is the DFSA’s version of a regulatory sandbox.
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Some of the key ways in which the DFSA supports innovation are:
Below, we provide more information on each area.
In order to apply to the ITL Programme, you must first complete and submit the ITL Pre-application Form which provides the DFSA with basic information about your firm’s business model and innovation. The DFSA will review and assess the ITL Pre-application Forms and only firms that meet the ITL eligibility criteria will be allowed to apply to the ITL Programme by completing and submitting the ITL Application Form. Acceptance of the ITL Pre-application Form does not automatically mean the firm will be granted an ITL.
The Innovation Testing Licence (ITL) Programme is the DFSA’s version of a regulatory sandbox.
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Licences under the ITL Programme typically work in the following way:
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To be eligible for the ITL Programme, an applicant and its business must meet the criteria as set out in DFSA Rule, GEN 13.4
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Fill In the Pre-application Form to Apply.
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Contacts and FAQs.
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The financial services sector is one of the largest users of digital technologies, using solutions like digital identification, mobile applications, artificial intelligence, distributed ledger technology, and cloud technology. These solutions have rapidly transformed the way customers access financial services as well as the way financial services providers conduct their business to meet the changing needs of their customers and global interconnected markets.
These developments present benefits to consumers such as financial inclusion, access to a wider range of financial products and greater convenience and efficiency; but they are not risk free. They present risks to data privacy, mis-selling and a general lack of consumer understanding about how these new products and services work. There are also risks to the financial sector such as legal and regulatory uncertainty, cybersecurity, fraud and money laundering and the financing of terrorism.
While the DFSA recognises the important role innovation and technology plays in enabling a wide range of financial services business models and products and services, the DFSA also recognises its own role in providing clear regulatory direction for Authorised Firms providing, and for customers accessing, innovative financial products and services.
The DFSA has an extensive regulatory regime enabling many different types of financial services business models and products and services. In many cases, innovative companies or those using innovative technologies are able to operate their business under the existing regulatory regimes. In some cases, certain activities or uses of technology may require amendments to existing regimes.
Please contact [email protected] if you are unsure about which particular regulatory regime applies to your innovative financial product or service.
We aim to be accessible and open in our thinking and our focus to create a dynamic and sustainable innovative ecosystem in the DIFC.
We aim to foster an open and transformative environment in the DIFC to discuss and promote financial and technological innovation and the associated challenges, risks, benefits and opportunities.
We are committed to actively engaging and growing with the wider financial services markets and understand the value, confidence and transparency that such engagement brings. We frequently engage with the global community and attend international, regional, and local events, both as delegates and speakers.
We are committed to a future of innovative and dedicate specific resources and expertise to grow our innovative DIFC community.
A Market Overview of Digital Custody for Digital Assets – Digital Custodian Whitepaper
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Risks, Threats and Potential Opportunities for the Financial Services Industry
Bryan Stirewalt, CEO, DFSA
The Deloitte Regulatory and Financial Crime Conference
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| 1 | Australia | Australian Securities and Investments Commission (2017) |
| 2 | Japan | Financial Services Agency of Japan (2018) |
| 3 | Hong Kong | Hong Kong Insurance Authority (2017) |
| 4 | Hong Kong | Securities and Futures Commission (2017) |
| 5 | Singapore | Monetary Authority of Singapore (2018) |
| 6 | Luxembourg | Commission de Surveillance du Secteur Financier (2019) |
| 7 | Malaysia | Securities Commission Malaysia (2018) |
| 8 | Hong Kong | Hong Kong Monetary Authority (2017) |
| 9 | Thailand | The Securities and Exchange Commission of Thailand (2022) |
The DFSA Crypto Token regime, which came into force on 1 November 2022, provides comprehensive requirements intended to protect users and prospective users of financial services relating to Crypto Tokens.
The Crypto Token regime addresses a range of risks associated with Crypto Token activities, including risks relating to Anti-Money Laundering and Combating the Financing of Terrorism, technology, governance, custody, disclosure, market abuse and fraud.
The Feedback Statement to CP143 – Regulation of Crypto Tokens explains the DFSA’s thinking regarding various elements of the regulations, as well as initial thoughts on other issues with respect to financial services activities relating to Crypto Tokens.
For more information, access the DFSA explainer on the regulation of Crypto Tokens.
The chart below sets out an overview of the Token ecosystem in the DIFC:
To submit an application for Crypto Token recognition, please send an initial enquiry through the general enquiries contact form.
Financial services and various other activities can only be undertaken with a Crypto Token that is Recognised, e.g., Tokens that the DFSA has recognised as meeting the criteria set out in GEN 3A.3.4. This prohibition extends to Derivatives relating to Crypto Tokens, and to Funds or portfolio managers that invest directly or indirectly (e.g., through other fund structures, including ETFs or indices) in Crypto Tokens. See GEN 3A.2.1(1) for the exact details of this prohibition.
There are two ways for the DFSA to recognise a Crypto Token:
An application for recognition of a Crypto Token may be submitted by an issuer or developer of the Crypto Token, an Authorised Person (such as an operator of a Multilateral Trading Facility) or an applicant to be an Authorised Person.
The applicant will have to apply using the appropriate form specified by the DFSA and provide information relevant to an assessment of the Crypto Token against the criteria set out in GEN 3A.3. This includes providing information as to:
That a person is clearly responsible and liable to investors for the Crypto Token.
The DFSA will then assess the application and consider whether the Crypto Token should be recognised. When the DFSA recognises a Crypto Token, it will publish notice of the recognition on the DFSA’s website. In accordance with the Regulatory Law, the DFSA will also publish and maintain a register of Recognised Crypto Tokens.
In order to guide firms looking to carry out financial services activities relating to Crypto Tokens, please read through and understand the DFSA’s licensing approach for both new firms and Authorised Firms looking to vary their existing financial services permissions.
What do I need to do?You will need to complete the general enquiries contact form:
Click on ‘Make an enquiry’ in the top navigation bar, then select ‘Authorisation/Registration’.
In the Form, we ask for information about your firm that will help us determine your readiness to operate a Crypto Token business. Amongst other things, we will assess:
The Financial Services permission(s) required, based on the firm’s understanding of the DFSA Rulebook.
It is important that you fully disclose the information we ask for. We take any non-disclosure of information that could affect our assessment seriously, especially if there is an attempt to mislead us. It is better to disclose information rather than withhold it.
We will then review the information provided. In making this assessment, if we do not believe that you understand the product or service you wish to provide, or do not have clarity around the required financial services permission(s), we will ask you to re-consider the relevant areas in your submission before we accept an application for a licence or licence variation.
How to contact us?The DFSA is available for any queries relating to the information requested within the general enquiries contact form. You can contact us at:[email protected].
| Crypto Token | Recognition Date | Notice |
| Bitcoin (BTC) | 1 November 2022 | |
| Ethereum (ETH) | 1 November 2022 | Link here |
| Litecoin (LTC) | 1 November 2022 | Link here |
| Toncoin (TON) | 2 November 2023 | Link here |
| Ripple (XRP) | 2 November 2023 | Link here |
| ZetaChain (ZETA) | 15 November 2024 | Link here |
We are actively engaged with the DIFC FinTech Hive and the innovative businesses that participate in the Hive’s various innovation programmes including the FinTech Accelerator Programme, Scale-up Programme, and Startup Bootcamp.
To find out more about the DIFC FinTech Hive
Visit HereThe DFSA is a founding member of the GFIN and currently sits on the GFIN Coordination Group, which is responsible for setting the strategic direction of GFIN. We are also actively engaged across all GFIN work-streams including the Cross-Border Testing Pilot, where in the 2019 Cohort, the DFSA worked with two Cross-Border applicants.
To find out more about GFIN, visit www.theGFIN.org / www.theGFIN.com
One of the first things to understand is whether you need to be regulated. To do so, you need to check the DFSA Rulebook to ascertain whether your proposed business activity is a regulated financial services activity. This will help in determining whether you need to be licensed by the DFSA to operate your business in or from the DIFC.
If the products or services you offer, or business activities you propose to conduct, fall within a regulated financial service, you have two options.
If your products or services or business activities are not a regulated financial service, you will not require a licence from the DFSA to operate in or from the DIFC. This could be because you are a technology provider or are partnering with regulated firms. However, the DFSA may still be interested in hearing more about what you are doing if your business or service offering involves an innovative technology.
It may not be clear whether the service you provide, or intend to provide, is a financial service that requires DFSA Authorisation. If this is the case, take a look at GEN Rule 2.2 in the DFSA Rulebook Modules and review our recent consultation papers. If you are still uncertain, you may wish to consider seeking advice from appropriate legal and other professional advisers specialising. If after seeking advice, you are still uncertain, you may contact the DFSA.
Still have questions? Contact the DFSA.
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