DFSA report puts spotlight on innovating responsibly and managing risk

The Dubai Financial Services Authority (DFSA) has published its 2025 annual report (72-page/8.3MB PDF), which confirmed the ongoing growth of the DIFC as it aims to become one of the world’s top four financial centres by 2033.

The report comes after the DFSA updated its crypto token regime earlier this year, along with taking an enhanced supervisory role on emerging risks around cybersecurity and AI.

It also launched a tokenisation regulatory sandbox, drawing interest from dozens of international firms as they look to explore tokenisation related financial services.

Marie Chowdhry, a fintech expert with Pinsent Masons in the UAE, said the report put a spotlight on the authority’s approach to market growth and innovation.

“The DFSA’s 2025 annual report points to a deliberate regulatory strategy centred on innovating responsibly and managing risk, reflecting a shift from reactive regulation toward proactive market development,” she said.

“This is particularly evident in its approach to innovative business models and products. Rather than taking a restrictive stance, the DFSA has expanded its framework to accommodate new business models, including tokenisation and crypto products, while introducing safeguards around governance, disclosure and risk management.

“The move toward a firm-led suitability assessment model for crypto tokens demonstrates a maturing regulatory environment in which responsibility is increasingly placed on regulated firms. 

“At the same time, the DFSA continues to emphasise market integrity and stability. During 2025, it conducted 79 risk assessments on authorised firms, published 8 thematic review reports, and carried out active enforcement activity, including investigations into misconduct and unauthorised business activities.”

It comes as the DIFC’s overall outstanding listings closes in on the US$150 billion mark, driven by a rapid expansion that saw more than 180 new regulated entities authorised to operate in the DIFC in 2025 - up 16% on 2024.

Against a backdrop of a public consultation on Islamic finance rules, 2025 also saw DIFC maintain its position as a leading jurisdiction for sukuk, with US$108 billion in outstanding listings.

Jessica White, a financial regulation expert with Pinsent Masons in Dubai, said that the continuing growth highlighted by the report also came with greater expectations on businesses in the DIFC.

“Growth has also been paired with deeper regulatory expectations around governance and operational resilience in the report,” she explained.

“It notes that high growth firms are facing challenges in aligning their internal control frameworks with rapid expansion, particularly in areas such as risk management, compliance and board oversight.

“For businesses, this reflects a dual message: the DIFC is actively positioning itself as a global hub for innovative financial activity, but firms operating within this environment need to demonstrate increasing sophistication in how they manage regulatory obligations and technological risks.”