Dubai Regulator Proposes First Major Fund-Rule Overhaul Since 2010

Tuesday, 07/07/2026 | 08:40 GMT by Damian Chmiel
  • The DFSA wants to scrap rigid private fund categories and simplify how investment managers are licensed in the Dubai International Financial Centre.
  • The regulator is also seeking early feedback on tokenized funds and on letting retail investors reach illiquid, real-economy assets.
DFSA logo

The Dubai Financial Services Authority (DFSA) proposed a broad rewrite of its investment fund rules today (Tuesday), opening a consultation that would change how private funds are classified and ease licensing for managers.

The regulator, which supervises firms in the Dubai International Financial Centre (DIFC), called it the most significant review of its funds framework since 2010.

The consultation, labeled CP 173, arrives as the DIFC's wealth and asset management sector has expanded quickly, with the center reporting a 321-firm industry overseeing roughly $176 billion at the end of 2025.

The DFSA framed the package as an effort to match its rules to the risk of a given fund and cut what it called unnecessary regulatory complexity.

Fund Classifications Get a Risk-Based Rewrite

Under CP 173, the DFSA wants to drop rigid classifications for specialist private funds in favor of a risk-based approach it said would better fit hybrid and multi-strategy investing.

The paper also proposes to simplify authorization for investment managers, confirming that dealing as agent and arranging deals fall under a single managing-assets license.

Other measures would update master-feeder public fund structures by removing eligibility criteria the DFSA described as outdated. The regulator also wants to scrap the external fund manager regime, a change it tied to what it said was a growing pipeline of firms seeking full DFSA authorisation.

A separate proposal would widen the room for employees to invest in funds run by their employers, both directly and through dedicated vehicles. The DFSA said the change is meant to support recruitment and retention, and to align staff interests with those of outside investors.

Charlotte Robins, the DFSA's managing director of policy and legal
Charlotte Robins, the DFSA's managing director of policy and legal

"This reflects our commitment to investor protection, market confidence, and proportionate regulation ," said Charlotte Robins, the DFSA's managing director of policy and legal.

The regulator said the broader aim is to deepen the DIFC's asset management base and keep it competitive for global managers, a claim it did not tie to independent data.

Tokenized Funds and Retail Access Put on the Table

Alongside the formal proposals, the DFSA is seeking early feedback on two areas it may turn into policy later. One is the tokenization of fund units and fund assets, including tokenized money market funds.

The other is a possible long-term investment fund regime that would let retail investors reach illiquid, real-economy assets currently open only to professional investors.

The tokenization question builds on earlier digital-asset work. The regulator introduced investment token rules in 2021 and has since recognized a short list of crypto tokens for use in the DIFC.

It stressed that both new topics sit at the feedback stage, with no commitment to draft rules.

Gulf Rivals Race to Rewrite Fund Rulebooks

The DFSA is not moving in isolation. In November 2025, the Financial Services Regulatory Authority of the Abu Dhabi Global Market, the DIFC's main regional rival, published Consultation Paper No. 12 of 2025, proposing streamlined regimes for smaller managers running $200 million or less and for managers serving only institutional clients.

That consultation, which closed on January 30, 2026, also moved to exempt employee investment vehicles from fund licensing, echoing the DFSA's employee-investment proposal. Abu Dhabi said funds-sector assets under management rose 48% year over year in the third quarter of 2025.

The retail-access idea has precedents further afield. The European Union's revamped long-term investment fund rules, known as ELTIF 2.0, took effect in January 2024 and opened illiquid assets to retail buyers, while Britain's Long Term Asset Fund regime moved the same way around the same time.

Both have drawn scrutiny over how easily ordinary investors can exit funds holding private assets, a concern the DFSA would have to weigh if it goes beyond feedback.

On tokenization, asset managers have already pushed ahead. BlackRock launched its BUIDL tokenized fund in March 2024, and rivals have since rolled out tokenized money market products. Dubai, for its part, has expanded the digital assets it recognizes in the DIFC, adding Ripple's XRP and its RLUSD stablecoin.

Rules Face a Long Path to Sign-Off

The consultation runs until September 7, 2026, with responses submitted through the DFSA's online form.

After that, the regulator said it will review submissions and finalize changes to the Collective Investment Law and Rules, the Investment Trust Law, the Regulatory Law and the relevant rulebook modules.

Any legislative changes then go to the President of the DIFC and on to the Ruler of Dubai for assent, which leaves the timeline open.

The DFSA cautioned that firms should not act on the proposals until the final changes are confirmed and published, and said timing will depend on how much the new rules ask authorized firms to change.

The Dubai Financial Services Authority (DFSA) proposed a broad rewrite of its investment fund rules today (Tuesday), opening a consultation that would change how private funds are classified and ease licensing for managers.

The regulator, which supervises firms in the Dubai International Financial Centre (DIFC), called it the most significant review of its funds framework since 2010.

The consultation, labeled CP 173, arrives as the DIFC's wealth and asset management sector has expanded quickly, with the center reporting a 321-firm industry overseeing roughly $176 billion at the end of 2025.

The DFSA framed the package as an effort to match its rules to the risk of a given fund and cut what it called unnecessary regulatory complexity.

Fund Classifications Get a Risk-Based Rewrite

Under CP 173, the DFSA wants to drop rigid classifications for specialist private funds in favor of a risk-based approach it said would better fit hybrid and multi-strategy investing.

The paper also proposes to simplify authorization for investment managers, confirming that dealing as agent and arranging deals fall under a single managing-assets license.

Other measures would update master-feeder public fund structures by removing eligibility criteria the DFSA described as outdated. The regulator also wants to scrap the external fund manager regime, a change it tied to what it said was a growing pipeline of firms seeking full DFSA authorisation.

A separate proposal would widen the room for employees to invest in funds run by their employers, both directly and through dedicated vehicles. The DFSA said the change is meant to support recruitment and retention, and to align staff interests with those of outside investors.

Charlotte Robins, the DFSA's managing director of policy and legal
Charlotte Robins, the DFSA's managing director of policy and legal

"This reflects our commitment to investor protection, market confidence, and proportionate regulation ," said Charlotte Robins, the DFSA's managing director of policy and legal.

The regulator said the broader aim is to deepen the DIFC's asset management base and keep it competitive for global managers, a claim it did not tie to independent data.

Tokenized Funds and Retail Access Put on the Table

Alongside the formal proposals, the DFSA is seeking early feedback on two areas it may turn into policy later. One is the tokenization of fund units and fund assets, including tokenized money market funds.

The other is a possible long-term investment fund regime that would let retail investors reach illiquid, real-economy assets currently open only to professional investors.

The tokenization question builds on earlier digital-asset work. The regulator introduced investment token rules in 2021 and has since recognized a short list of crypto tokens for use in the DIFC.

It stressed that both new topics sit at the feedback stage, with no commitment to draft rules.

Gulf Rivals Race to Rewrite Fund Rulebooks

The DFSA is not moving in isolation. In November 2025, the Financial Services Regulatory Authority of the Abu Dhabi Global Market, the DIFC's main regional rival, published Consultation Paper No. 12 of 2025, proposing streamlined regimes for smaller managers running $200 million or less and for managers serving only institutional clients.

That consultation, which closed on January 30, 2026, also moved to exempt employee investment vehicles from fund licensing, echoing the DFSA's employee-investment proposal. Abu Dhabi said funds-sector assets under management rose 48% year over year in the third quarter of 2025.

The retail-access idea has precedents further afield. The European Union's revamped long-term investment fund rules, known as ELTIF 2.0, took effect in January 2024 and opened illiquid assets to retail buyers, while Britain's Long Term Asset Fund regime moved the same way around the same time.

Both have drawn scrutiny over how easily ordinary investors can exit funds holding private assets, a concern the DFSA would have to weigh if it goes beyond feedback.

On tokenization, asset managers have already pushed ahead. BlackRock launched its BUIDL tokenized fund in March 2024, and rivals have since rolled out tokenized money market products. Dubai, for its part, has expanded the digital assets it recognizes in the DIFC, adding Ripple's XRP and its RLUSD stablecoin.

Rules Face a Long Path to Sign-Off

The consultation runs until September 7, 2026, with responses submitted through the DFSA's online form.

After that, the regulator said it will review submissions and finalize changes to the Collective Investment Law and Rules, the Investment Trust Law, the Regulatory Law and the relevant rulebook modules.

Any legislative changes then go to the President of the DIFC and on to the Ruler of Dubai for assent, which leaves the timeline open.

The DFSA cautioned that firms should not act on the proposals until the final changes are confirmed and published, and said timing will depend on how much the new rules ask authorized firms to change.

About the Author: Damian Chmiel
Damian Chmiel
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About the Author: Damian Chmiel
Damian Chmiel is a Senior Analyst & Editor at Finance Magnates with more than 15 years of experience in the CFD and online trading industry. Active as both a trader and journalist since 2010, he focuses on broker coverage, fintech innovation, and regulatory developments across Europe, the Middle East, and Asia. His work includes interviews with C-level leaders at major brokerages and fintech platforms, as well as co-authoring Finance Magnates’ quarterly industry benchmarking reports. Damian’s reporting is data-driven, market-aware, and grounded in direct industry engagement. His analysis and commentary have also been cited by external media outlets, including Investing.com, Binance, The Asset, Stockhead, and Dispatch. Education: MA in Finance and Accounting, Cracow University of Economics
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