Abu Dhabi Financial Authority Unveils Regulation Framework For Crypto

Crypto Regulation in Abu Dhabi

Abu Dhabi’s financial regulatory watchdog revealed yesterday the launch of a new regulatory framework for activities connected to cryptocurrencies. The top financial regulator for the middle eastern country also published a guideline that explains how crypto assets in the country are regulated.

Abu Dhabi Launches Crypto Framework

The Abu Dhabi Global Market (ADGM) announced the launch of a framework that governs the regulation of crypto asset-related activities done by institutions in the ADGM.

The ADGM is the international financial center deep in the heart of the United Arab Emirates’ capital, Abu Dhabi. The ADGM collaborates with international financial institutions and helps member institutions with their regulatory framework, legal jurisdiction, and the creation of an attractive business environment. The Financial Services Regulatory Authority (FSRA) is a branch of the ADGM that works as the market’s top regulator.

In a press release, the ADGM said:

“The framework is designed to address the full range of risks associated with crypto asset activities, including risks relating to money laundering and financial crime, consumer protection, technology governance, custody, and exchange operations. This new framework is one of ADGM’s many efforts and ongoing commitment to bolster the economic diversification of Abu Dhabi through innovation and sustainable initiatives.”

Regulatory Authority Takes The Reins

The new regulatory framework comes in the wake of a consultation with the public done by the FSRA last May 28. The ADGM says using public opinion to shape the regulatory framework made several refinements possible. One of the changes is the addition of a “Daily Value Trading Levy imposed on Crypto Asset Exchanges on a sliding scale basis.”

Richard Teng, the FSRA CEO, commented on the new rules, saying:

“We are encouraged by the significant global and regional interest from exchanges, custodians, intermediaries and other institutions to our crypto spot regulatory framework.”

The CEO is optimistic that they are on the right track, saying their talks with other regulators validated the position the FSRA took on crypto.

Last February, the FSRA stated that while virtual currencies are not considered legal tender, they were gaining global interest as a medium of exchange.

The New Framework

The FSRA also announced the publication of a 34-page document detailing the regulation of crypto assets in the ADGM. The document explains how the regulatory rules work and adds the requirements needed to operate a crypto asset business, a cryptocurrency exchange, or a custodian service.

The ADGM will issue a Financial Services Permission to institutions that qualify to operate a crypto asset business.

Finally, the new document does not apply to initial coin offerings (ICOs), as the FSRA already released a separate regulatory framework for ICOs in October of 2017.

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