Dubai Embraces the Future of Finance with Tokenization of Digital AssetsNews 31 Jan 2021 02:09 pm
A partnership between UAE C4IR, DIFC Authority and DFSA to develop and utilize tokenization of digital assets through the use of blockchain technology
Dubai, 31 January 2021 - The UAE Centre for the Fourth Industrial Revolution (C4IR UAE), a joint initiative of the Dubai Future Foundation (DFF) and the World Economic Forum (WEF), signed a memorandum of understanding (MoU) with Dubai International Financial Centre Authority (DIFC) and Dubai Financial Services Authority (DFSA) to launch a testbed for FinTech companies to develop and test the tokenization of digital assets through the use of blockchain technology to further the future of finance.
The MoU will facilitate a controlled regulatory forum in the UAE to test digital assets and tokenization using blockchain technology. Tokenization is when sensitive data is encrypted and transformed into a digital format to ensure greater security of the data or the asset. Set to start in January 2021, the project will turn policy recommendations into a pilot sandbox that could lead to the full licensing of companies in this sector.
The project aims to advance the sector’s approach to tokenization of digital assets, including addressing regulatory and commercial requirements. In addition, the collaboration will foster cooperation and dialogue between stakeholders such as government, regulators, corporates, start-ups and incubators. The agreement enables the MoU partners to evaluate outcomes and assess the scalability and regulatory implications of the piloting projects.
The three parties involved in the agreement, DIFC, DFSA and C4IR are part of the “Dubai Future District” launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. Entities based in this district aim to support Dubai’s economy by providing an attractive investment, technological, legislative, service and enabling environment. Moreover, the collaboration aligns with DIFC’s Future of Finance strategy that seeks to attract, license and grow innovative startups with the digital assets and tokenization space.
The MoU was signed by HE Khalfan Belhoul, CEO of DFF on behalf of C4IR UAE and Mr. Arif Amiri, CEO of DIFC Authority and Mr. Peter Smith, Acting Chief Executive of DFSA at Dubau Future Foundation’s innovation eycosystem, AREA 2071.
Khalfan Belhoul, CEO of Dubai Future Foundation said: “This collaboration allows us to move one step closer to a fully digital economy. The agreement also paves the way for homegrown innovation, market adoption, and the expansion of digital solutions across the public and private sectors. The Dubai Future Foundation is committed to Dubai’s quest of building a thriving digital economy based on technological innovation and progressive regulatory frameworks. This strategic collaboration provides an ideal environment for the tech ecosystem to flourish. The partners will develop synergies that will accelerate business opportunities for public and private sector institutions. Moreover, we also have a unique opportunity to identify and support local and international fin-tech start-ups. The partnership allows for the adoption of financial solutions that will drive the future of finance and boost Dubai's overall global competitiveness.”
Arif Amiri, Chief Executive Officer of DIFC Authority said: “DIFC is playing an instrumental role with the C4IR to drive innovation in the UAE and Dubai. The agreement will help our clients which are part of the region's largest financial centre harness opportunities to drive the future of finance by embracing digital adoption, supported by enabling regulation.”
Peter Smith, Acting Chief Executive of DFSA said: “Our strategic collaboration with the C4IR highlights our support of the country’s vision for innovation-backed economic growth. By working closely with the C4IR, we seek to drive further growth in the nation’s financial ecosystem, strengthening and accelerating the UAE’s role in the 4th Industrial Revolution.”
The three signatories will meet on a regular basis to outline the pilots and develop the frameworks for implementation. The signatories are also expected to promote awareness and development of the financial sector through other forms of knowledge exchange.
This partnership is a culmination of months of effort by (C4IR UAE), in highlighting the importance of building an advanced infrastructure and a regulatory system for the development and adoption of digital assets and tokenization. The first phase of the project was a report published in November 2020, and the pilot will follow on by developing frameworks that promote accessibility, security and transparency in the financial sector.