Doha is inching closer to digital assets framework, paving way for legal recognition of digital assets, a move to support the country's digital economy strategy, according to a senior official of the Qatar Financial Centre (QFC).

"With active involvement from many interest technology firms and industry stakeholders, we have developed a solid framework for tokenizing real-world assets such as securities, debt capital market instruments, investments, sukuk, and other asset classes. The framework is expected to be finalised and enacted by Q4 of this year," QFC Chief of Financial Services Sector Henk Jan Hoogendoorn told in an interview that appeared in a newsletter of World Alliance of International Financial Centers.

Qatar is contemplating legal recognition of digital assets as part of efforts to put in place legislation for a tokenisation framework. In this regard, the QFC Regulatory Authority and the QFC Authority jointly developed a QFC digital assets framework to support Qatar’s digital economy strategy and the continued development of the QFC as a leading financial and business centre in the Middle East.

The QFCRA and QFCA had sought public comments from firms and industry practitioners on the structure, content, and practitioner usability of the proposed framework and the deadline to submit the responses was January 2, 2024.

The framework is designed to develop a legal and regulatory framework for digital assets through the establishment of a tokenisation framework in the QFC that will provide legal certainty and a trusted technology environment for digital assets.

It seeks to provide legal recognition of digital assets and address issues as ownership of the underlying assets, custody arrangements, the transfer of ownership, trading and exchange of digital assets and smart contracts.

The proposed digital assets framework is being developed on a phased manner with the first phase 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.

The proposed rules primarily make provision for the treatment of tokens, representing underlying that are specified products under the QFC financial services regulations.

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.

QFC recently launched the Digital Assets Lab, which is part of its efforts to foster innovation, research, and development in the financial sector and the digital assets sphere, Hoogendoorn said, adding this initiative resonates with the Qatar Fintech Strategy and Qatar Central Bank's proactive approach to adopting innovative technologies.

The lab provides a collaborative space where start-ups, businesses, and researchers can explore and create innovative solutions, products, and services related to digital assets and distributed ledger technologies. It aims to position Qatar as a leading hub for digital innovation by offering a comprehensive platform for promoting the adoption of emerging technologies across sectors, he said in the interview.