ADGM regulatory finalizes fiat referenced tokens framework
The Financial Services Regulatory Authority (FSRA) of ADGM has finalized amendments to its regulatory framework to govern Regulated Activities involving Fiat-Referenced Tokens (FRTs). The formalization of this framework follows industry engagement and feedback received on Consultation Paper No. 9 of 2025.
Following consideration of that feedback, the FSRA intends to issue further Guidance on the framework and the amendments will take effect from 1 January 2026.
The amendments include an outline of the FSRA’s approach to “accepting” FRTs for use in ADGM, expansion of the scope of Regulated Activities that may be carried on in relation to FRTs and Rules applicable to Authorised Persons that hold or control Client FRTs. Certain requirements applicable to Authorised Persons that carry on the Regulated Activity of Issuing an FRT are also amended.
KARM Legal consultants on LinkedIn noted that the key highlights of the Fiat-Referenced Tokens (FRTs) amendments is that they are the criteria applied when assessing “Accepted Fiat-Referenced Tokens” and includes a new regulated activity, fiat referenced token intermediation. It also has updated capital and safeguaring requirements for FRT issuers and intermediaries.
Additionally KARM notes that it has expanded the scope of the Regulated Activity of Providing Custody to include FRTs with monthly independent attestations to ensure full backing and transparency including technology governance, disclosure, and client asset protection standards.
Lana Akkad, an expert in finance regulation at Pinsent Masons in the UAE, said, “The FSRA’s proposed framework marks an interesting shift in how fiat-referenced tokens are treated within the ADGM. By expanding the scope of regulated activities to include custody, payment services, and intermediation, the FSRA is acknowledging the growing commercial utility of FRTs and the need for robust oversight.
Marie Chowdhry, a financial regulation expert at Pinsent Masons in the Middle East said the proposals would expand on the ADGM’s regulatory framework for FRTs introduced at the end of 2024.
She added: “Those regulations represented the first step towards introducing a legislative framework governing the use of FRTs in the ADGM. However, when those rules were introduced, it was widely acknowledged that more changes would be required to bring them up-to-speed and in line with international standards.”
“The proposals outlined in this consultation paper seek to achieve these objectives, and it appears that they have been designed to minimise any disruption to existing custodians, broker-dealers and MTFs authorised to carry on activities in relation to virtual assets – particularly those involved in safekeeping, holding and trading FRTs in conjunction with their virtual asset-related activities,” she said.
