Dubai Financial Services Authority (DFSA) Launches "Tokenisation Regulatory Sandbox Guide"

Since 2024, RWA (Real-World Assets) has become a hot topic in the field of Web3 and traditional financial digitization.

Authors: Iris, Liu Honglin

Since 2024, RWA (Real-World Assets) has become a hot topic in the field of Web3 and traditional financial digitization. From real estate tokens, bills, supply chain finance, to bonds and fund share tokenization, more and more project parties and capital are beginning to look for channels for compliance implementation around the world.

On March 17, 2025, the Dubai Financial Services Authority (DFSA) released the "Tokenisation Regulatory Sandbox Guide", which for the first time clearly included tokenization in the regulatory focus and launched the Innovative Testing License (ITL) mechanism, releasing a realistic, clear and practical compliance path.

Currently, the application window for intention is open, which is only from March 17 to April 24, 2025. Therefore, for RWA project parties planning to go overseas, this path is an important option that deserves special attention and grasp at the current stage.

What signals does the DFSA tokenization sandbox send?

The guidance clearly states that the DFSA will include Tokenised Investments in the regulatory system and specifically distinguish tokens into:

· Security Token

· Derivative Token

In this way, tokenized assets will no longer be in a regulatory gray area, and RWA projects in the Dubai market, especially the tokenization of traditional assets such as real estate, supply chain finance, bills, bonds, etc., will also have clearer compliance basis and regulatory guidance.

At the same time, DFSA’s setting of sandbox application objects provides practical operating space for different types of RWA project parties. According to DFSA guidelines, the company entities that can currently apply to participate in the sandbox include:

· Companies that issue, trade, hold or settle tokenized investments such as shares, bonds, sukuk and units in collective investment funds;

· Financial institutions that already hold DFSA licenses and plan to expand tokenization business;

· A firm team with a deep understanding of the applicable legal and regulatory framework.

In other words, whether it is a traditional financial institution with a certain financial background that hopes to expand its tokenization business, or a startup project that is in the model exploration stage and focuses on the digitization of RWA assets, they can all apply for entry with the help of the DFSA sandbox mechanism and obtain a low-threshold compliance trial opportunity.

Especially for small and medium-sized RWA startup teams, the phased regulatory exemptions and supportive policies provided in the sandbox can help the team verify the business model at lower cost in the early stage, while clarifying the future compliance licensing path.

What is more noteworthy is that the DFSA has launched an innovative testing license mechanism called ITL Tokenisation Cohort, which allows RWA project parties to enter the market in advance without fully meeting all capital requirements and risk control obligations, and to test products and models in a real environment with low thresholds, and then transition to the licensing stage.

The overall process is divided into three stages:

1. Expression of intention stage

Project parties are required to submit an expression of interest forming to indicate their plans to conduct tokenisation business in DIFC (Dubai International Financial Centre). DFSA will conduct a preliminary assessment based on background, governance, technical solutions, etc.

2. ITL testing phase

After passing the initial review, the project can enjoy partial exemptions from capital, prudential obligations, and reporting requirements within a 6-12 month window period, access the real market environment at low cost, and test the business model. However, the DFSA also clearly pointed out that participating projects are still subject to continuous supervision, and the project parties must ensure that key risk points such as information disclosure, DLT system security, and custody arrangements meet regulatory requirements.

3. License conversion stage

After the testing period, the project must choose to apply for a full DFSA license or to exit the business according to the exit mechanism. The FSA will strictly implement market exit for projects that fail to meet the "graduation" standards.

It should be noted that this sandbox only serves the tokenization of traditional financial assets and real-world assets. Therefore, other pure cryptocurrency projects (Crypto Tokens) and fiat stablecoins (Fiat Crypto Tokens) are not applicable.

Why is the DFSA Tokenization Sandbox worth paying attention to?

It can be seen that although both Dubai DFSA and Hong Kong HKMA are actively promoting the clarification of tokenization supervision, the two mechanisms show significant differences in participation thresholds and applicable entities.

For RWA entrepreneurs, the ITL sandbox mechanism launched by DFSA has several practical advantages that deserve special attention:

1. Suitable for start-ups and small and medium-sized teams, flexible and independent application

The overall design of Hong Kong's Ensemble Sandbox focuses on the participation of the traditional financial system, and is dominated by licensed institutions such as banks and securities firms. Startup projects often need to rely on partners to participate,