SECURELY PROVIDE VIRTUAL ASSETS
TRADING SERVICES
FSRA's regulatory framework and guidance notes address every aspect of virtual assets, keeping pace with the industry and taking a future-orientated approach to support its ecosystem.
As ADGM was the first jurisdiction globally to introduce and implement a comprehensive virtual assets regulatory framework, its registered entities have benefited from the long-term benefits of being established in Abu Dhabi.
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Responsible virtual asset multilateral trading facilities or venues, look to regulatory environments like ADGM, which upholds high standards and fosters market confidence in order to encourage institutional involvement within virtual asset markets.
ADGM's Financial Services Regulatory Authority (FSRA) focuses on proper governance, oversight and transparency in relation to all players within this space.
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COMPREHENSIVE &
ROBUST REGULATIONS
Certain MENA countries use digital currencies as a means of preserving their capital, with cryptocurrencies offering a level of protection against currency devaluation
Preserving capital
MARKET LANDSCAPE
MENA
MENA Region is the world’s fastest growing cryptocurrency market.
9.2%
of global digital currency transactions
$550BN
received by individual investors (Jul 2021 - Jun 2022) *Source Chainalysis
48%
annual increase
MARKET LANDSCAPE
UAE
The UAE recorded a 35% increase in cryptocurrency activity during July 2021 to June 2022 compared the same period last year.
$28BN
UAE cryptocurrency activity
(Jul 2020 - Jun 2021)
$38BN
The adoption of cryptocurrencies in the UAE is due to:
government support
forward-focused regulations
enhanced consumer protection
supporting the establishment of crypto businesses and Web3 technology
UAE cryptocurrency activity
(Jul 2021 - Jun 2022)
*Source Chainalysis
A TRUSTED
As the leading jurisdiction worldwide for the regulation of virtual asset activities, ADGM provides a trusted environment with access to regulated trading platforms and comprehensive regulatory frameworks that require virtual asset firms to provide a clear guidance on the risks associated with virtual asset activities.
ENVIRONMENT
WHICH DIGITAL ASSETS
DOES ADGM REGULATE?
ADGM takes a tailored approach to different categories of Digital Assets:
currently accepted Virtual Assets (incl. several Stablecoins), with more to come
ADGM does not regulate utility tokens which do not exhibit the features and characteristics of a regulated investment / instrument under FSMR
Virtual Assets
Non-fiat virtual
currencies
(e.g. Bitcoin, Ether).
Digital Securities
Digital tokens that have the features and
characteristics of a Security under the FSMR (e.g. Shares, Debentures and Units in a Collective Investment Fund)
Stablecoins
Digital tokens that are fully (1:1) backed by fiat currency
Derivatives & Funds
Derivatives and Collective Investment Funds of Virtual Assets, Digital Securities and Utility Tokens
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Treated as commodities and therefore, not deemed Specified Investments under FSMR.
Market intermediaries (e.g., broker dealers, custodians, advisors, dealing in or
managing Virtual Assets, and MTFs using Virtual Assets, need to be licensed / approved
by FSRA.
Only activities in Accepted Virtual Assets will be permitted.
Capital formation activities are not provided for under the Virtual Assets Framework,
and such activities are not envisaged under the Market Rules.
Must be deemed to be Securities by the FSRA pursuant to Paragraph 58(2)(b) of FSMR.
All financial services activities in relation to Digital Securities, such as operating primary / secondary markets, dealing / trading / managing investments in or advising on Digital Securities, are subject to the relevant regulatory requirements under the FSMR.
Market intermediaries and market operators dealing or managing investments in Digital Securities need to be licensed / approved by FSRA as FSP holders (including as MTFs), RIE or RCH, as applicable.
Treated as a form of digital representation of Fiat Currency.
Where used as a payment instrument for the purposes of Money Transmission as defined under the FSMR, the activity will be licensed and regulated as Providing Money Services
Regulated as Specified Investments under the FSMR.
Market intermediaries and market operators dealing in such Derivatives and Collective Investment Funds will need to be licensed / approved by FSRA as FSP holders, RIE or RCH, as applicable.
REGULATING
VIRTUAL ASSETS
Virtual assets have largely been decentralised by nature and therefore historically have not been part of diversified portfolios, however there is a recent market shift, through growing interest from both private and institutional investors, with Morgan Stanley and Goldman Sachs offering access to clients via a Galaxy Digital fund.
Within our ecosystem we have trading venues, exchanges and virtual asset intermediaries who are licensed and approved by ADGM's Financial Services Regulatory Authority.
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The authority focuses on 5 key risk areas:
1
FINANCIAL CRIME
FSRA AML Rulebook applies in full to virtual Asset activities. Entities will need to consider reporting obligations in relation to FATCA and Common Reporting Standards.
2
CONSUMER PROTECTION
All material risks associated with Virtual Assets generally, Accepted Virtual Assets and Virtual Assets products, services and activities must be disclosed.
4
EXCHANGE OPERATIONS & MARKET ABUSE
Virtual Asset trading platforms regulated as ‘Multilateral Trading Facilities (MTFs)
(including market surveillance; settlement processes; transaction recording; transparency & public disclosure mechanisms; and exchange-like operational systems and controls, including in relation to access).
5
CUSTODY
Custodians regulated similarly to FSRA regulated ‘conventional’ custodians. FSMR includes Virtual Assets as Client Assets and Client Investments, and requires more frequent reconciliations & reporting.
3
TECHNOLOGY GOVERNANCE
Systems and controls must be in place in relation to Virtual Asset wallets; origin and destination of Virtual Asset funds; private keys; security and risk management.
TECHNOLOGY
GOVERNANCE
BENEFITS OF A REGULATED
ENVIRONMENT
Some of the benefits associated with setting up and operating a Virtual Asset Firm in a regulated environment are:
trust and credibility
opportunities to access investment
legal certainty
YOUR BUSINESS
CAPITAL
Abu Dhabi and ADGM represent an ideal location for setting up a virtual assets business as the ecosystem has at its foundation an innovative and progressive regulatory framework, which provides a safe operating infrastructure for Multilateral Trading Facilities and Intermediaries.
A leading global destination
ADGM was the world’s first jurisdiction to develop and implement a comprehensive framework and is the leading global destination for Virtual Asset activities.
Familiar regulatory standards
ADGM’s regime applies to its virtual asset players regulatory standards similar to those applicable to traditional markets. Firms setting up in ADGM have the benefit of a regulatory framework that enables them to carry out traditional financial services activities as well as virtual asset or digital securities activities.
English common law jurisdiction
ADGM has a strong rule of law through the direct application of English common law, strong judiciary, speed of judgement facilitated by the world’s first e-Courts, seat of arbitration and strong system of enforceability of judgements providing legal certainty and comfort for transactions undertaken in its market
ABOUT
ADGM
Abu Dhabi Global Market is an award winning international financial centre located in Al Maryah Island and consists of three independent authorities:
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World class financial business support
02
Established relationships with strategic partners (incl. ADIO, Hub 71 & ADQ)
03
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Tax Friendly
Environment
Global connectivity & modern infrastructure
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Internationally recognised legal and regulatory jurisdiction
Registration Authority (RA)
Financial Services Regulatory Authority (FSRA)
ADGM Courts
Why ADGM?
OUR
ECOSYSTEM
Venture Capital & Private Equity Firms
Market Access & Support Partners
Virtual Asset Multilateral Trading Facilities
Virtual Asset Intermediaries & Service Providers
Financial Technology Providers
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ABU DHABI, AN IDEAL
BUSINESS LOCATION
The United Arab Emirates has become a leading centre for innovation in finance attracting global corporations and investment banks, fintech, PE and VC, asset managers and advisory firms, thanks to its robust, vibrant and diverse business environment, and exceptional lifestyle opportunities.
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ideal geographical location to high-growth economies in MEASA and between East and West markets
Abu Dhabi’s GDP is USD 350 billion,
accounting for 2/3 of the UAE Economy
home to the largest SWFs including ADIA, Mubadala and ADQ
a favourable investor friendly tax regime (0% direct tax and over 138 Double Taxation Treaties)
PLACE TO LIVE
Abu Dhabi is one of the safest cities in the world and has been listed in Numbeo's Quality of Life Index for the 5th consecutive year
It has a stable political environment and a vibrant economy, with exceptional healthcare and leading educational institutions
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KNOWLEDGE
CENTRE
Please refer to the following resources for more information on ADGM's framework and guiding principles.
Hear from the regulator
SET UP YOUR
VIRTUAL ASSET FIRM IN ADGM
multiple iterations
Application form provided to the Applicant
Provide overview of the proposed activity to FSRA
Provide demos to the FSRA
Outlining a number of conditions to be met before a FSP is granted
Invitation to formal application after review of a draft application
Addressing of any issues identified as part of the green light review by the FSRA. The applicant is now a fully regulated firm and under FSRA supervision.
Once all IPA conditions are met, FSP is granted with stipulation of activities to be undertaken under the license
After all systems and staff are in place, third party assurance is completed and FSRA completes an onsite review, green light is given 2-4 weeks prior to Go -Live