Dubai Regulator DFSA Bans Privacy Tokens Monero, Zcash on Regulated Exchanges

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The Dubai Financial Services Authority (DFSA) has prohibited the use of privacy-focused cryptocurrencies, such as Monero (XMR) and Zcash (ZEC), on regulated platforms within the Dubai International Financial Centre (DIFC). The new regulations officially took effect on January 12, 2026.

Scope of the Ban

According to the regulatory documents, the prohibition applies to trading, promotion, and fund activity involving privacy tokens. (Read more: Top 10 Privacy Coins in 2025: How They Work and Why They Matter)

• The rules state that a person within the DIFC “must not… carry on a financial service relating to a privacy token or that involves the use of a privacy device”.
• The regulator cited risks related to anti-money laundering (AML) and sanctions compliance as the primary drivers for the decision.
• The DFSA noted that privacy tokens and associated tools, such as mixers like Tornado Cash, pose challenges to financial surveillance and compliance standards.

While the new rules restrict regulated entities from facilitating transactions with these assets, reports indicate that residents are still permitted to hold privacy coins in private, non-custodial wallets.

Shift in Regulatory Framework

Coinciding with the ban, the DFSA has updated its approach to token approval. The regulator eliminated its previous “prescribed list” of recognized crypto tokens in favor of a “firm-led suitability assessment model”.

• Under this new framework, licensed firms are responsible for evaluating tokens against specific criteria, including governance transparency and the ability to comply with AML requirements.
• The DFSA’s supervisory guidelines explicitly categorize privacy-enhancing technologies — such as ring signatures and stealth addresses — as negative indicators, noting that they prevent on-chain monitoring and are incompatible with Know-Your-Customer (KYC) protocols.

Regional and Global Alignment

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The DFSA’s move aligns the financial free zone with regulations already present in mainland Dubai. The Virtual Assets Regulatory Authority (VARA), which oversees crypto activities outside the DIFC, banned privacy tokens in February 2023.

In the United States, the legal landscape for privacy tools tightened following the 2025 conviction of Tornado Cash co-founder Roman Storm. Similarly, the European Union’s Markets in Crypto-Assets (MiCA) regulation includes provisions prohibiting anonymous crypto transfers that will take effect in 2027.

Market Context

The regulatory restriction comes despite significant market performance for privacy assets in the preceding year:

• Zcash was reported as the top-performing cryptocurrency of 2025, rallying over 800%, while Monero ranked as the second-best performing large-cap token with a 127% increase.
• Following the implementation of the rule on January 12, Monero and Zcash continued to see price movements, with XMR rising approximately 16% over a 24-hour period.

This article is published on BitPinas: Dubai Regulator DFSA Bans Privacy Tokens Monero, Zcash on Regulated Exchanges

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