DUBAI- The regulator for DIFC, Dubai's state-owned financial free zone and the Middle East's major finance centre, has released the first part of a regulatory framework for digital tokens aimed at opening up trading of the fast-growing asset class.

The move by the Dubai Financial Services Authority (DFSA) comes as Gulf countries start to look at how to regulate digital assets to attract new forms of business as regional economic competition heats up.

The framework initially covers security and derivative tokens it refers to as investment tokens - digital representations of rights and obligations equivalent to those conferred by assets such as shares or futures contracts, issued, transferred and stored using distributed ledger technology such as blockchain.

It expects to issue another consultation this year for tokens not yet covered by the regulation, including exchange tokens - also known as cryptocurrencies - utility tokens and some asset-backed tokens known as stablecoins.

Last month the United Arab Emirates' Securities and Commodities Authority and the Dubai World Trade Centre Authority (DWTCA) agreed a framework that allows DWTCA to approve and license financial activities relating to crypto assets.

Gulf neighbour Bahrain in 2019 released rules regulating crypto-assets.

(Writing by Lisa Barrington; Editing by Jan Harvey) ((;))