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:

01

World class financial business support

02

Established relationships with strategic partners (incl. ADIO, Hub 71 & ADQ)

03

04

Tax Friendly
Environment

Global connectivity & modern infrastructure

05

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

Learn how to set up your Virtual Asset Firm in ADGM

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