Digital Assets

QFC Issues Proposals for the Introduction of a Digital Assets Framework

The Qatar Financial Centre (“QFC”) Regulatory Authority (“Regulatory Authority”) and the Qatar Financial Centre Authority (“QFC Authority”) have issued a joint Consultation Paper (“CP”) seeking public comment on proposals to introduce a QFC Digital Assets Framework.

The proposed digital assets framework is being developed on a phased basis with phase one focusing on the establishment of legislation to provide for a QFC tokenisation framework. It is envisaged that subsequent phases will focus on building out the detailed regulatory framework for specific activities and products. In that connection and in order to give effect to the proposed framework, the Regulatory Authority and the QFC Authority have prepared a range of draft legislative instruments necessary to achieve the objectives for the framework. The proposed legislation is as follows:

Regulatory Authority Rules

Investment Token Rules 2023 - The proposed Rules primarily make provision for the treatment of tokens (“investment tokens”) representing underlyings that are Specified Products under the QFC Financial Services Regulations (“FSR”). They provide for any person who carries out an activity in relation to such a token to be conducting a regulated activity, requiring authorisation and supervision by the Regulatory Authority.

Investment Tokens Miscellaneous Amendments Rules 2023 - The proposed Rules amend six sets of Regulatory Rules in consequence of the introduction of investment tokens.

QFC Authority Regulations and Rules

Digital Asset Regulations 2023 - The proposed Regulations establish the concept of tokens and what constitutes a permitted token. The Regulations also contain provisions relating to transfer of tokens, token ownership, and rights in the underlying and various definitions for the types of token service providers that will be subject to the proposed licensing framework in the QFC.

Digital Asset (Companies Regulations and Special Company Regulations) Amendment Regulations 2023 - The proposed Regulations amend the Companies Regulations and Special Company Regulations to provide for the tokenisation of shares and related amendments.

Digital Asset (QFCA Rules and Non-Regulated Activities Rules) Amendment Rules 2023 - The proposed Rules amend the QFCA Rules and Non-Regulated Activities Rules and establishes the framework for licensing token service providers, including a code of practice for token service providers, and sets out the activities that may be conducted in the QFC in relation to tokens.

The consultation period is open until 2 January 2024.

Please click here to access the CP and the proposed draft legislation set out in Attachments 1 and 2 to the CP.