The Financial Services Regulatory Authority (FSRA), a regulator in the United Arab Emirates (UAE)’s financial center and free zone, the Abu Dhabi Global Market (ADGM), has released a consultation paper that proposes amendments to regulations that govern the use of virtual assets.
Public Keys: Regulator Wants to Modify Requirements
A regulator in the Abu Dhabi Global Market (ADGM) — a financial centre and free zone located in the UAE — has unveiled a consultation paper proposing amendments to the regulatory framework that governs the use of virtual assets. The paper also proposes significant changes to the UAE’s capital markets framework.
In a recently released statement, the regulator, the Financial Services Regulatory Authority (FSRA), insists the proposals are aimed at reinforcing the financial center’s position in the Middle East North Africa (MENA) region. The statement indicated that the proposals also aim to help the ADGM strengthen its leadership role within the virtual asset sector.
Prior to the recent consultation paper, ADGM had not been able to regulate virtual assets. The financial center saw a notable increase in virtual asset-related service providers since 2018, when the regulatory framework was established. At the time of the consultation paper’s release, the ADGM had 11 fully-licensed and approved in-principle virtual asset players, the statement said.
Therefore, in order to help the ADGM maintain its leading position, the regulator’s consultation paper is proposing changes to the requirements on the “use, sharing, and reuse of public keys,” as well as making amendments to risk disclosure requirements. The FSRA would also allow ADGM-regulated MTF/Custodian groups to carry out non-fungible token activity (NFT).
Enhancing ADGM’s Financing Ecosystem
The FSRA also proposes to strengthen its regulatory system to permit listings and offers from mining and petroleum companies. This document states that the regulator wants to make it easier for such companies to attract investors in their growth stages by offering improved capital structures as well as ways to raise capital.
In his remarks following the unveiling of the consultation paper, Emmanuel Givanakis, CEO of the FSRA, is quoted in a statement explaining the reasons behind the plan to amend the financial centre’s regulatory regime. He explained:
“The significant enhancements to our capital markets framework is part of the FSRA’s objective to continue to develop ADGM’s comprehensive regulatory framework to further enhance ADGM’s vibrant financing ecosystem. It will help support and bolster the growth of enterprises that will, in turn, contribute to the growth and diversification of the economy of Abu Dhabi and the broader UAE as well as the broader region, while providing greater participant and investor choice.”
Givanakis also said the ADGM’s regulatory framework already caters to the funding needs of companies at different stages of their growth and life cycle. The FSRA stated that the public can comment on the paper until May 2022. At that time, the public’s responses are due back to the FSRA.
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