UAE private wealth optimization platform and ACX compliance, a crypto and Web3 compliance advisory firm, have published a guidebook ” Navigating ADGM’s DLT Foundations”. This initiative is designed to equip businesses with the knowledge and strategies necessary to navigate the intricacies of the Abu Dhabi Global Market’s (ADGM) Distributed Ledger Technology (DLT) ecosystem.

In November 2023, the Abu Dhabi Global Market (ADGM) introduced the Distributed Ledger Technology (DLT) Foundations Regulations 2023, marking the world’s first legal framework for blockchain within its jurisdiction. They have been actively broadening its regulatory framework relating to digital assets and DLT, with the objective of establishing a comprehensive legal and regulatory structure for such businesses.

The ADGM DLT foundations regime offers a supportive ecosystem for blockchain-based businesses, prioritizing investor protection and market integrity. Specifically tailored guidelines provide clarity and certainty for businesses in the blockchain and DLT sector, emphasizing transparency, accountability, and investor confidence. Key benefits include regulated token issuance, programmable governance, and legal protection for decentralized protocols, bridging the gap between on-chain and off-chain realms.

Entities interested in registering a DLT foundation with the ADGM Registration Authority (ADGM RA) must meet stringent application criteria outlined in the Regulations. Eligible applicants include a diverse array of entities such as blockchain foundations, web3 entities, decentralized autonomous organizations (DAOs), and traditional foundations seeking to harness the potential of DLT for enhanced operations.

According to the guidebook, DLT foundations are bound by numerous ongoing and annual compliance obligations to ensure their operations align with legal standards. These ongoing obligations necessitate DLT foundations to maintain a registered office within the ADGM, serving as a central point for all communications and notices.
Additionally, foundations are required to appoint a Company Service Provider1 responsible for several critical functions. This provider must keep all corporate records as mandated by applicable laws, ensure the foundation has a registered office within the ADGM, act as the foundation’s representative in all interactions with the ADGM RA, including the service of documents, and manage all required notifications and filings with the ADGM RA in accordance with relevant laws.

Hermione Harrison, Director, and Head of Corporate Governance M/HQ commented: “The introduction of the ADGM DLT Foundations Regulations in 2023 signifies a significant breakthrough for the UAE’s cryptocurrency industry, positioning DLT foundations as leaders in innovation and progress within both the ADGM and beyond. These Regulations establish an unprecedented level of regulatory clarity, opening doors to a future marked by heightened transparency and efficiency across the blockchain and Web3 sectors.”

So far two DLT Foundations have been registered in ADGM, IoTa and Finischia.