The Abu Dhabi Regulators Introduce Its Crypto ‘Guiding Principles’

The FSRA pledges to comply with international safety standards while taking a pro-market stance.

The financial regulator of Abu Dhabi Global Market free economic zone (ADGM), the Financial Services Regulatory Authority (FSRA), published its “Guiding Principles” on its approach to regulation and supervision of digital assets.

Every principle outlines the FSRA’s risk appetite and priorities, each covering a key pillar of ADGM’s holistic approach, such as: a robust and transparent regulatory framework; high standards of authorisation; Anti-Money Laundering (AML) and combating the financing of terrorism (CFT); risk-sensitive supervision; enforcement powers for regulatory breaches; its commitment to international cooperation and and supporting financial sanctions. 

The official webpage of the ADGM published five principles without date specification. They fall under the titles of Internationally Recognised Regulatory Framework, Dynamic and Market-Oriented Regulations, Risk-focused and Proportionate Approach, Cooperation and Shared Responsibility, Delivering High Standards of Quality & Service.

There are some specific points that would define the ADGM regulatory landscape, although in general the tone and content of the principles correspond to standard declarations of making the market more dynamic, innovative and safe.

The ADGM’s legislative framework will be based on English Common Law according to the principles. 

As part of the economic zone, the Regulator, Registrar and Court functions will operate independently, with a regulatory committee appointed by the board for the purpose of ensuring supervisory independence.

While these premises may sound liberal, they will be supplemented by compliance with international AML/CFT standards, close cooperation with other jurisdictions and “financial sector surveillance” as a part of the FSRA function.

The regulator will also engage in “regular but informal” collaboration with market participants. One-on-one sessions will be held between regulatory and business teams, as well as the working groups made up of market participants and professionals.

The ADGM published a consultation paper In March 2022, proposing that licensed companies be allowed to facilitate nonfungible token (NFT) trading in the jurisdiction. Foreign companies Binance and Kraken were the first to receive regulatory approval to operate in ADGM in April.