Wed. Feb 12th, 2025

The UAE Securities and Commodities Authority (SCA) has recently unveiled draft regulations focused on the growing fields of Security Tokens and Robo-Advisory Services. These new regulations aim to create a robust regulatory framework that balances innovation with market transparency and investor protection. As the financial world becomes increasingly digitized, the SCA seeks to ensure that the UAE remains at the forefront of this evolution, fostering an environment that encourages both growth and compliance with global standards. The SCA has also invited stakeholders to share their feedback by February 14, 2025, offering them a chance to shape these key regulations.

In particular, the draft regulations for Security Tokens lay out a comprehensive legal structure for the issuance, trading, and management of these digital assets. By utilizing distributed ledger technology (DLT), the SCA aims to enhance the transparency, efficiency, and accessibility of financial markets. The framework for tokenized securities and commodities is designed to ensure compliance with international standards, offering investors a high level of protection while promoting operational efficiency. This approach underlines the UAE’s commitment to staying ahead in the global digital finance race, all while maintaining market stability.

On the other hand, the draft for Robo-Advisory Services addresses the rise of automated investment platforms, which use complex algorithms to offer personalized investment advice and portfolio management. The regulations propose that these robo-advisors must ensure algorithm transparency and undergo rigorous stress testing to assess their performance under varying market conditions. Furthermore, the draft mandates that robo-advisory platforms prioritize a client-centric approach, tailoring recommendations based on individual investment goals and risk tolerance.

These developments are a clear reflection of the UAE’s strategy to create a thriving digital finance ecosystem. By embracing emerging technologies such as blockchain and artificial intelligence, the SCA is not only fostering innovation but also setting a benchmark for regulators around the world. This move is expected to attract international investment and build trust in the UAE’s rapidly growing digital asset market.

By BNA

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