Developments include a comprehensive framework for the issuance of FRTs within the ADGM
ADGM, the international financial center of Abu Dhabi, and its Financial Services Regulatory Authority (FSRA) presented a series of recent regulatory enhancements at Fintech Abu Dhabi, as part of Abu Dhabi Financial Week (ADFW 2024).
Developments include a comprehensive framework for the issuance of Fiat-referenced tokens (FRT) within ADGM, expanding the range of digital assets available in a regulated environment, the publication of detailed guidance on IT risk management and a document consultation on proposed updates to the Virtual Asset Framework, further strengthening ADGM’s position as a leading hub for digital innovation and financial regulation.
Regulatory framework for FRTs
ADGM FSRA’s regulatory framework for FRTs supports their issuance, expanding the range of digital assets in a secure and regulated environment. Developed following extensive industry consultations, the framework incorporates key elements such as strict reserve asset requirements, governance measures, transparency of information provided, prudential safeguards and clear redemption rights for token holders.
By designating the issuance of FRTs as a separate regulated activity, the ADGM FSRA framework ensures that high standards must be met by those issuing FRTs, reflecting global best practice.
“ADGM’s advancement as a progressive international financial center is supported by its diverse and comprehensive regulatory initiatives. As a forward-thinking jurisdiction, each new regulatory framework and amendment introduced reflects ADGM and FSRA’s commitment to staying ahead of the curve,” said Emmanuel Givanakis, CEO of ADGM FSRA .
IT risk management advice to improve resilience
At the same time, the ADGM FSRA’s guidance on IT risk management enhances its regulatory approach by providing insight into what it considers to be critical aspects of sound and robust risk management in this area. It also highlights the importance of IT risk in business operations, introducing measures such as comprehensive and standardized rules on standardized incident reporting and the introduction of RegTech solutions. These measures aim to further improve IT resilience and ensure adaptability to changing technological and regulatory needs.
“We continually assess and address the evolving risks and needs of the digital asset ecosystem, while remaining committed to driving responsible innovation across the financial landscape,” Givanakis added.
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Virtual Asset Acceptance Guidelines
ADGM also announced a consultation document proposing changes to the FSRA regulatory framework for virtual assets (VAs) at ADFW 2024. These changes aim to refine VA acceptance processes within ADGM, to further refine capital requirements and fees and address emerging business models such as staking. .
FSRA is seeking feedback from stakeholders to ensure the framework aligns with industry developments while maintaining strong regulatory standards. The document also solicits comments on the acceptance criteria for Fiat-referenced tokens not issued by ADGM and proposes expanding investment opportunities for venture capital funds.
FSRA, through its regulatory approach, aims to balance innovation with rigorous regulatory oversight. Announcements made at Fintech Abu Dhabi during ADFW 2024 received positive feedback from delegates including financial executives, experts and executives, investors, entrepreneurs and start-ups in the services sector global and regional financial institutions.