ADGM amends crypto regulations to attract more VASPs

ADGM amends crypto regulations to attract more VASPs

The Financial Services Authority (FSRA) of ADGM has implemented amendments to its regulatory framework for digital assets. The implementation of these amendments follows extensive industry engagement and feedback received on Consultation Paper No. 11 of 2024, with an aim to make their regulations more comprehensive and simpler.

The focus of the implemented amendments is on revisions to the process whereby Virtual Assets (VAs) are accepted for use as Accepted Virtual Assets (AVAs) in ADGM, alongside appropriate capital requirements and fees for Authorised Persons conducting Regulated Activities in relation to VAs (VA Firms). The amendments also introduce a specific product intervention power in relation to VAs as well as enshrining rules that confirm our existing approach to the prohibition of using privacy tokens and algorithmic stablecoins within ADGM. Finally, the amendments expand the scope of investments in which Venture Capital Funds may invest.

The FSRA has updated the Guidance – Regulation of Virtual Asset Activities in ADGM to reflect the implemented measures and to provide further guidance to VA Firms in relation to applying the AVA assessment criteria.

Emmanuel Givanakis, Chief Executive Officer of ADGM’s FSRA said, “The implementation of these changes marks a significant milestone in the evolution of the FSRA’s framework for digital asset regulation. Through extensive consultation with industry stakeholders, we have further enhanced our framework to provide the regulatory certainty that industry participants need, while addressing the evolving risks of the digital asset ecosystem. We believe this further positions ADGM as a premier jurisdiction for digital asset-related activities and shows our commitment to fostering responsible innovation in financial services.”

Assesing the amended virtual asset regulations, Kokila Alagh noted that the amendments are a bold move to streamline digital asset regulation. She states on LinkedIN, “The Financial Services Regulatory Authority (FSRA) has transitioned from a regulator-led “Accepted Virtual Asset” approval model to a self-assessment regime by authorized VA Firms.”

She explains, this means authorised Persons (VA Firms) must self-assess Virtual Assets using enhanced AVA criteria; notification-only to FSRA before commencing activity; firms must publish and maintain a list of approved AVAs on their website; and ongoing monitoring to ensure continued compliance.

She added, ” The FSRA has also enhanced the assessment criteria for determining whether a Virtual Asset meets the requirements of being an AVA. The updated criteria basis includes, *Traceability & monitoring, *Security standards, *Market profile, *Exchange connectivity, DLT infrastructure, Innovation/efficiency and Practical functionality.”

The Regulatory authority of ADGM in UAE publishes digital asset amendments consultation paper

The Regulatory authority of ADGM in UAE publishes digital asset amendments consultation paper

The Financial Services Regulatory Authority (FSRA) of ADGM has published Consultation Paper No. 11 of 2024 setting out proposed amendments to its regulatory framework for Authorized Persons conducting Regulated Activities involving Virtual Assets in ADGM and to seek feedback on potential changes to that framework.

The proposed amendments include revisions to the process by which Virtual Assets are accepted for use within ADGM and refinements to capital requirements and fees. The paper also seeks feedback on several questions, including questions relating to staking and other emerging business models involving Virtual Assets.

One of the proposed amendments is that now the scope of the Regulated Activity of Providing Custody under FSMR currently
encompasses Financial Instruments, VAs and Spot Commodities. As outlined above, all VAs held in custody must be AVAs. The FSRA is asking for feedback on whether authorized persons can engage in providing custody to other than AVAs and hold a broader range of digital assets. They are also asking what other digital assets could be held.

    Feedback is also sought on the criteria to be applied in determining whether non-ADGM issued Fiat-Referenced Tokens should be accepted within ADGM. The paper also proposes to expand the scope of investments in which Venture Capital Funds may invest.

    As per the consultation the FSRA does not intend to restrict acceptance to FRTs issued only by issuers located in ADGM (“Domestic FRTs”). However, the FSRA notes that FRTs issued by issuers outside ADGM (“Foreign FRTs”) may not be subject to standards as
    stringent as those applied to Domestic FRTs. Given this, Foreign FRTs approved as Accepted FRTs for use within ADGM will be
    categorised as such to distinguish them from Domestic FRTs, which are subject to FSRA standards.

    The consultation adds, all Authorized Persons that use Foreign FRTs in conducting Regulated Activities will have to disclose to their Clients that such Accepted FRTs are not subject to the FSRA’s requirements for issuers of Domestic FRTs.

      The consultation period will close on 31 January 2025.

      The new consultation paper came out on the same day that ADGM issued its fiat-referenced-tokens framework, better known as its stablecoin regulations.

      The new framework expands the suite of digital assets already offered by ADGM regulatory authority.
      As per the press release, the framework introduces several key components that establish robust standards for FRT issuers to ensure financial stability and investor protection such as reserve assets, governance and integrity, transparent disclosure, prudential safeguards and redemption rights.


      The framework makes FRT issuance a distinct Regulated Activity within ADGM’s comprehensive financial services regulatory regime. It has been designed to be risk-proportionate while ensuring FRT issuers operate in a safe and prudent manner.


      Emmanuel Givanakis, CEO of the ADGM FSRA stated, “Our FRT framework is a significant milestone in ADGM’s evolution as a progressive international financial centre. Through extensive consultation with industry stakeholders, we have created a regime that balances innovation with strong regulatory oversight. This framework provides the regulatory certainty that industry participants need while maintaining high standards of financial stability and investor protection. We believe this positions ADGM as a premier jurisdiction for responsible FRT issuance and shows our commitment to fostering responsible innovation in financial services.”

      As per the framework, an Accepted Fiat Referenced Token means a Fiat-Referenced Token that, in the opinion of the Regulator, meets the requirements that permit a regulated activity to be carried on in relation to it.
      The FSRA defined a Fiat-Referenced Token as a digital asset, the transfer and storage of which is achieved through the use of distributed ledger or similar technology, which can be used as a medium of exchange with a stable store of value, by referencing a fixed amount of a single fiat currency; and enabling the holder to redeem the token in exchange for the amount of the fiat currency referred to from its issuer upon demand.
      The fiat referenced token can be used for remittance payments, and payment transactions, including transfers, payments for services, direct debits, credit transfers between bank accounts, including standing order, and others.