The FSRA’s risk management guidance includes decentralized infrastructures

The FSRA’s risk management guidance includes decentralized infrastructures

The Financial Services Regulatory Authority (FSRA) of ADGM has published its Information Technology (IT) Risk Management Guidance (Guidance), providing a comprehensive and holistic framework for managing technology risks in ADGM’s financial sector which references to decentralized infrastructures which are used by virtual asset exchanges.

The FSRA Guidance reflects extensive industry engagement, following the publication of the FSRA’s Discussion Paper on IT Risk Management and an industry briefing held in February 2024. During this engagement, the FSRA received positive feedback from stakeholders on the Guidance.

It comprises four key sections that identify best practices for IT risk management that entities regulated by the FSRA should consider adopting:

Establishing a Culture of Effective IT Risk Management – covers governance and controls for IT risk, including incident management, audits, and management of IT third party service providers.
Managing an IT Environment – addresses IT asset management, IT infrastructure, systems lifecycle, resilience, and cyber incident response.
Interacting Securely – focuses on system access controls, cryptographic key management, and secure online transactions.
Leveraging Business Embedded Technologies – explores emerging technologies including algorithm-driven solutions like generative artificial intelligence, and decentralized infrastructure solutions such as virtual asset platforms.


The Guidance is aligned with best practices outlined by international standard-setting bodies and financial regulators. The regulatory body of ADGM expects regulated entities will implement the best practices in a manner that is proportionate to their size, complexity, and business activities.

Emmanuel Givanakis, CEO of the ADGM FSRA said: “As technology continues to transform financial services, robust IT risk management becomes increasingly critical. This Guidance reinforces our supervisory focus on IT risk and cybersecurity while supporting innovation in digital finance. It provides practical direction for senior executives, compliance officers, and IT practitioners to strengthen their risk management frameworks. This initiative reflects our commitment to building a resilient and progressive international financial centre in Abu Dhabi.”

ADGM regulatory authority releases consultation paper for security tokens, stablecoins and more

ADGM regulatory authority releases consultation paper for security tokens, stablecoins and more

UAE ADGM regulatory authority, the Financial Services Regulatory Authority (FSRA) has published a consultation paper No.10 to propose amendments on various regulations including those related to virtual assets. The amendments discuss, Digital security tokens, commodity tokens, stablecoins, and utility tokens.

As per the announcement, The proposed miscellaneous amendments result from the FSRA’s desire to simplify, clarify and correct certain requirements where appropriate and necessary, but are also in response to the FSRA’s experience of operating such legislation in practice.

The consultation period will close on 10 December 2024.

Digital Securities

In terms of virtual assets under the title “Regulation of Digital security offerings, virtual assets under the FSMR (ICO Guidance) and its Guidance on Regulation of Digital Securities activity in ADGM, it deals with the FSRA’s treatment of virtual assets and the financial activities that can be conducted in relation to them within ADGM.

The FSRA has defined Virtual Assets in the FSMR, as Digital Securities, which means digital or virtual tokens that have features and characteristics of a Security under the FSMR (such as Shares, Debentures and Units in a Collective Investment Fund).

As such all financial services activities in relation to Digital Securities, such as operating primary / secondary markets, dealing / trading / managing investments in or advising on Digital Securities, are subject to the relevant regulatory requirements under the FSMR.

Virtual assets as Commodities

In addition, market intermediaries and market operators dealing or managing investments in Digital Securities need to be licensed / approved by FSRA as FSP holders (including as Multilateral Trading Facilities), Recognised Investment Exchanges or Recognised Clearing Houses, as applicable “Virtual Assets” such as non-fiat virtual currencies, crypto ‘exchange tokens.

The Guidance also discusses virtual assets treated as commodities where only activities in Accepted Virtual Assets will be permitted.

In terms of capital formation activities, they are not within the virtual asset framework offered by FSRA in ADGM. While Derivatives and Collective Investment Funds of Virtual Assets, Digital Securities and Utility Tokens regulated as Specified Investments under the FSMR will need to be licensed by FSRA as FSP holders.

Utility Tokens

When it comes to Utility Tokens, which means tokens that can be redeemed for access to a specific product or service and are not for investment, they are also not regulated.

Stablecoins

Fiat tokens or stablecoins, which are fully backed by underlying fiat currencies which are used as a payments instrument for the purposes of money transmission will be licensed and regulated by the FSRA as providing money services.

After selection by Abu Dhabi Hub71, XBTO receives in principle approval from ADGM

After selection by Abu Dhabi Hub71, XBTO receives in principle approval from ADGM

XBTO, a global institutional digital assets company, have received In-Principle Approval from the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) to operate in the UAE, after being selected by Hub71 Digital assets lab.

Philippe Bekhazi, Founder & CEO, XBTO said, “Receiving an In Principle Approval is a significant step forward for XBTO in establishing a strong presence in the rapidly growing Gulf region. We believe the UAE has the potential to become the global hub for digital asset businesses worldwide, so it is important that XBTO as one of the world’s leading digital assets companies has a foothold here. I’m excited to see this area of the business develop in the coming months and years.”

The IPA marks a significant milestone in XBTO’s journey and commitment towards becoming a regulated digital assets business in the different jurisdiction they are presently in, having been regulated by the Bermuda Monetary Authority (BMA) since 2019 and currently applying for licenses in the UK and France.

A major reason XBTO has chosen ADGM as a base for its expansion is that the FSRA is one of the first regulators globally to introduce and implement a comprehensive and bespoke regulatory framework for the regulation of exchanges, custodians, brokers, and other intermediaries engaged in virtual asset activities and ADGM being the fastest growing financial centre in the region, with a 211% increase in assets under management (AUM) in Q1 2024 compared to Q1 2023.

In addition, with notable financial institutions launching in Abu Dhabi last year, Abu Dhabi is rapidly attracting its target segment of clients including family offices, traditional and crypto native macro hedge funds, high net worth individuals, blockchain protocols, VC funds, brokerages and more.

Karl Naïm, Global Head of Business Development & General Manager XBTO Middle East added, “This is an exciting time for digital assets, the UAE and surrounding countries. There is strong interest in the growth of the sector here. XBTO is working with organizations across the region and we look forward to working hand in hand with the regulator, decision makers and institutions to help build a thriving and leading digital assets ecosystem from Abu Dhabi.”

XBTO will continue to have its main company headquarters in Bermuda, and European offices in Paris and London, while leveraging Abu Dhabi as a base to better locally serve the Middle East. In line with XBTO’s long term commitment to the UAE and regulatory frameworks, and subject to the regulatory approval for the grant of the FSP, the company plans on making further investments to invest in their presence in the UAE.

UAE crypto custodian Changer AE receives additional crypto broker license from FSRA

UAE crypto custodian Changer AE receives additional crypto broker license from FSRA

UAE based Changer.ae an independent crypto custodian service, has obtained the regulatory approval from the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) to conduct the Regulated Activity of Dealing in Investment as Agent. In addition to conducting the Regulated Activity of Providing Custody and offer investors a reliable, convenient, and accessible wallet to safeguard and manage their Virtual Assets, Changer will now be able to securely and seamlessly deal in investments as an agent.

The platform is dedicated to securing users’ Virtual Assets and provides an elevated digital experience and is complemented by a transparent subscription-based monthly service according to the assets held under custody. In addition to Providing Custody, Changer is will launch a new exchange service that provides banking-grade escrow services for secure transactions. This initiative underscores Changer’s commitment to delivering a secure, simple, and seamless digital experience.

As per the announcement, cryptocurrency investors worldwide can easily access Changer’s services via the user-friendly Changer mobile application, available on the App Store, Google Play Store, or Huawei App Gallery.

Wang Hao, CFA, CFtP, Senior Executive Officer of Changer, commented, “We are proud to obtain the FSP license, targeting individuals globally and providing them with a reliable, convenient, and accessible wallet to safeguard and manage their virtual assets. This license marks a significant milestone, highlighting our dedication to delivering a secure, simple, and seamless digital custody service that is independent and regulated”.

changer.ae received  the Financial Services Permission (FSP) license by the Financial Services Regulatory Authority (FSRA) in the Abu Dhabi Global Market (ADGM) for crypto custodial services in September 2023.

Aspen Digital receives in principle approval to offer digital asset investment services in UAE

Aspen Digital receives in principle approval to offer digital asset investment services in UAE

Aspen Digital, aimed at helping to accelerate the continued adoption of digital assets, and offer technical solutions to asset managers, high net worth individuals, family officers and other financial institutions, has received an in principle approval (IPA) from the regulatory arm of Abu Dhabi ADGM ( Abu Dhabi Global Market). the FSRA.

Aspen Digital which is co-incubated by Everest Ventures Group, a venture studio specializing in digital assets and blockchain technologies and TTB Partners, a regulated, boutique advisory and asset management firm started by Sir John Bond’s family will act as a bridge between tradition finance and the digital assets industry.

Subject to final regulatory approval, Aspen Digital will be licensed to provide financial services out of ADGM and expand its product offering and presence within the rapidly growing digital asset ecosystem in the Middle East.

Aspen Digital’s unique offering as a one-stop solution for private wealth to build their allocation to the alternative digital asset class will play an important role in driving the local ecosystem and broader adoption within the region.

CEO of Aspen Digital, Elliot Andrews said, “The IPA is an important milestone for Aspen Digital as we look to expand both our global footprint and offering within the digital asset sector. With a deep understanding of the asset class, ADGM has built a very comprehensive and clear regulatory framework in which to operate. We are grateful for their support and look forward to working closely with them in driving the next wave of digital asset adoption. 

UAE regulator grants QCP capital approval to offer crypto derivative trading solutions

UAE regulator grants QCP capital approval to offer crypto derivative trading solutions

QCP, an institutional digital assets company, announced in a press release, that they have received In-Principle Approval from the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) to conduct regulated activities. According to the press release, the decision to make a move into this strategic market for the company’s footprint was in anticipation that the Middle East is going to become a dominant global hub for capital flowing into traditional and digital assets.

Founded in 2017 QCP is one of the largest trading desks in the world for digital asset derivatives and a provider of trading solutions and structured strategies. Ernst & Young finds that as of September 2023, the monthly volume of crypto derivatives stands at US$1.33 trillion, which is nearly four times the size of the crypto spot market. With most of the crypto derivative market currently existing outside the US, Abu Dhabi and the UAE have a lot of potential to capture this market segment.

In addition, with notable financial institutions such as Goldman Sachs and Brevan Howard launching in Abu Dhabi last year, Abu Dhabi is rapidly attracting its target segment of clients including family offices, traditional and crypto native macro hedge funds, high net worth individuals, blockchain protocols, VC funds, brokerages and more. QCP also previously announced a partnership with Further Ventures, which is reflective of how the company plans to meet the demand for financial and derivatives digital asset offerings in the market.

Melvin Deng, CEO, QCP said, “The IPA is a significant development for us and advances our goal of embracing greater regulation. We are committed to meeting ADGM’s transparent and high standards of regulatory compliance. Our intention is to be a responsible player that wants to support market confidence. We are proud to be the first Singaporean digital asset market maker and broker-dealer to set up here in the market and hope we can encourage others to venture into this dynamic market. We want to learn from what other players are doing in Abu Dhabi and the region and bring our expertise as a first mover in digital assets to the ecosystem.”

Arvind Ramamurthy, Chief of Market Development at ADGM said, “We congratulate QCP on receiving its IPA from ADGM and welcome them to Abu Dhabi’s thriving international financial centre. With a leading trading desk and digital asset capabilities, we look forward to QCP’s integration into ADGM’s ecosystem, which will streamline regional opportunities. As the digital assets landscape continues to evolve in the Middle East, we anticipate more companies like QCP to recognise the progressive and comprehensive nature of ADGM’s regulatory frameworks, fostering confidence in choosing Abu Dhabi as their regional base.”

QCP will continue to have its main company headquarters in Singapore while leveraging on Abu Dhabi as a base to break new ground and drive innovation. It is well positioned to expand on the back of strong business growth, with a 64 % Y-o-Y increase in Q1 trading volumes. In line with QCP’s long term commitment to the UAE, subject to the regulatory approval for the grant of the FSP, the company plans on making further investments to invest in their presence in the UAE.

Web3 Klickl receives full VASP license from ADGM UAE

Web3 Klickl receives full VASP license from ADGM UAE

UAE based Klickl International, a regulated open banking and virtual asset platform has announced that it has secured a full license from the Financial Services Permission (FSP) from the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market. This achievement highlights Klickl’s dedication to tackling challenges across the Web3.0 and virtual asset landscape by developing an integrated financial platform that harmoniously blends traditional finance (TradFi) with the expanding realm of cryptocurrency.

Being founded in Abu Dhabi, Klickl strategically harnesses the emirate’s progressive regulatory environment and dynamic economic backdrop. This strategic positioning enables Klickl to streamline processes, bridging the gap between traditional financial markets and the digital economy. Such an approach not only ensures smoother transitions and improved accessibility but also lays the groundwork for integrating the next one billion users into the Web3.0 ecosystem.

Klickl’s platform is uniquely designed to be destination-agnostic, operating under a decentralized global licensing scheme that empowers users across various jurisdictions. This innovative framework not only advances inclusivity in financial services but also makes a notable impact on the global virtual assets community, facilitating seamless exchanges across diverse financial domains.

Michael Zhao, CEO of Klickl, shared his vision: “Obtaining the FSP license from FSRA marks more than a regulatory milestone; it validates our vision to merge traditional finance and cryptocurrency seamlessly. Our deep-rooted presence in Abu Dhabi, a region renowned for its pioneering strides in financial innovation, has equipped us to pioneer solutions that anticipate and fulfill the diverse needs of today’s global investors.”

Zhao added, “We are grateful for the unwavering support of the Abu Dhabi Global Market and the FSRA. Their forward-thinking regulatory policies are indispensable in our quest to redefine financial infrastructure. As we move forward, Klickl is excited to continue breaking new ground, ensuring the digital economy is accessible, secure, and efficient for everyone.”

With this new licensing, Klickl is set to expand its operations, offering robust, secure, and compliant financial services that are designed to meet the needs of today’s dynamic financial landscape and tomorrow’s digital horizons.

Kikl had receive preliminary approval back in September 2022.

UAE’s first home grown crypto custodian officially launched

UAE’s first home grown crypto custodian officially launched

Tungsten headquartered in UAE has officially launched the first home grown and regulated crypto custodian after receiving a license from UAE’s Financial Services Regulatory Authority (FSRA) to operate at the Abu Dhabi Global Market (ADGM). The platform is designed to store digital assets securely for institutional investors.

Over 12 months to July 2023, the value of digital assets received by the UAE was over US$34.9 billion (Chainalysis). Approximately 67%, or around US$23 billion in transactions, was carried out by institutional investors, demonstrating a significant opportunity for specialist digital assets custody.

As a regulated custodian, Tungsten aims to provide peace of mind for institutions investing in digital assets, including cryptocurrency. 

Arvind Ramamurthy, Chief of Market Development at ADGM said, “We congratulate and welcome Tungsten to Abu Dhabi’s international financial centre, ADGM. As much as the ever-evolving digital asset space needs regulatory controls to protect investors, it also needs risk management services that enable them to understand and invest securely. The concept of Tungsten revolves around this and allows it to harness the opportunities within this industry. As custodian of virtual assets, Tungsten’s offerings, coupled with ADGM’s vibrant ecosystem and progressive regulations for digital assets, will empower investors and maintain market integrity with robust solutions.”

Chris Desjardins, Tungsten Founder and Senior Executive Officer said: “Digital assets present unprecedented opportunities across generations, yet the cornerstone of realising their potential lies in establishing a trusted investment environment. The UAE is at the forefront of this transformation, crafting a robust framework for digital assets that not only sets a global benchmark but also positions it as a pioneering force in the finance sector of tomorrow. Our immense pride stems from being developed and regulated within the UAE, a testament to our commitment to excellence and innovation in this dynamic landscape.”

Tungsten provides secure, regulated crypto custody so clients can confidently invest in digital assets. It is led by Chris Desjardins, an industry veteran with deep knowledge and experience in building and growing digital assets and cryptocurrency solutions. Previously, he co-founded Big Index, a Canadian institutional crypto wallet technology provider successfully acquired by Brane Inc., where he became Head of Product. Through his leadership, Tungsten sets an unparalleled benchmark for digital asset custody.

Tungsten is independent and segregated from other digital asset services, such as the trading of crypto assets, focusing purely on safeguarding clients’ digital assets. The business ensures secure online and offline procedures, including bank-grade physical vaults, enterprise-grade wallet management and world-class network hardware. Additionally, clients benefit from strong governance and high insurance coverage, providing utmost reassurance to institutional investors.

Over 2024, Tungsten, the UAE homegrown crypto custodian will scale customer acquisition, catering to a growing demand from regional institutional investors, family offices, asset managers, and high-net-worth individuals (HNWIs).

Tungsten had previously started hiring for key positions and as per their press release will continue to.

UAE regulated digital assets custodian Tungsten now hiring

UAE regulated digital assets custodian Tungsten now hiring

UAE organically incubated, digital assets custodian, Tungsten, regulated under the FSRA (Financial Services Regulatory Authority) in ADGM is on a hiring spree.

Tungsten, according to Further Ventures, UAE Venture Capital firm, and its incubator, is a 100% UAE sovereign digital asset custodian that offers secure and regulated custody service.  It is also backed by an Abu Dhabi Sovereign Wealth fund.

As per Tungsten, “ We are on a mission to create the most advanced digital assets custody and treasury services for our clients, helping them to become self-sovereign organizations with strong mechanisms for access control, multi-tier and multi-factor authentication, no single points of failure, and advanced transactional risk management.”

Tungsten goes on to note, “Our offering will be insured by global underwriters, regulated exclusively by ADGM (Abu Dhabi Global Markets), and host its core services in a Tier IV data center with 24/7 physical security.”

Tungsten is custodian of virtual assets that protects client funds from geo-political, regulatory, and cloud risk by operating a fully private physical and application infrastructure out of the most secure facilities in the world.

The website states that Tungsten goes beyond custody, their integrations span exchanges, liquidity providers, analytics, tokenization, and more, providing a holistic solution.

The company is founded by Christian Desjardins, Co-Founder and CEO , as well as Jose J. Perez Aguinaga as the Co-Founder and CTO.

Tungsten is currently hiring an assistant Manager-Deputy MLRO.

In the advert for the position it states that Tungsten, backed by an Abu Dhabi Sovereign Wealth Fund has expansion plans across the Middle East and Eastern Europe.

The job advert notes, “We aim to redefine the landscape of secure, user-friendly virtual asset custody solutions. Our commitment is to unparalleled security, reliability, and ease of use, positioning Tungsten as the preferred choice for institutions managing their virtual assets.”

Tungsten is looking for Assistant Manager – Deputy MLRO, to support the Money Laundering Reporting Officer (MLRO) in implementing and managing their anti-money laundering (AML) and counter-terrorist financing (CTF) framework.

This comes as more and more Blockchain and digital asset entities launch from ADGM in UAE.

This article was updated on Feb 27th 2024. Update concerned founding members.

Hayvn ousted CEO is incognito with speculations about possible embezzlement

Hayvn ousted CEO is incognito with speculations about possible embezzlement

UAE based HAYVN which is a digital asset focused financial institution, providing trading, asset Management, custody, and payments previously regulated and active in Abu Dhabi, has fallen under a great wall of scrutiny and a black cloud both with regards of the activities of its previous CEO as well its current status as a regulated entity in the UAE.

In less than a week, Hayvn not only announced the so called resignation of its CEO Christopher Flinos and the request to make its status inactive in Abu Dhabi ADGM ( Abu Dhabi Global Market), but it also insinuated that the CEO had carried out a huge misconduct. In an email statement made by the PR agency of Hayvn, Fully Vested, to UNLOCK Blockchain, the agency noted, “The CEO stepped down from the management of the business, following a request from the Board of Directors due to the CEO’s conduct.”

Sources close to LaraontheBlock have noted that there has been speculation moving around with regards to possible embezzlement. This is further reconfirmed by the fact that Christopher Flinos is nowhere to be found. His phone is off, he does not respond to LinkedIn or other messages, and he himself has not made any statement to clear his name or explain his actions and that of the board of Hayvn.

LaraontheBlock reached out to the FSRA (Financial Services and Regulatory Authority) at ADGM with two questions. The first question, as a regulatory authority what actions have or will be taken towards Hayvn given the current cloud of speculation around it and the activities of its prior CEO?

The second question, can ADGM confirm that institutional clients in the UAE have not been effected financially or otherwise from the actions taken by the prior CEO and Hayvn as a crypto custodian and if effected will there be restitution?

The response which came from FSRA attributed to Mr. Emmanuel Givanakis. CEO of the Financial Services Regulatory Authority at ADGM stated, “As the financial regulator of ADGM, the Financial Services Regulatory Authority (FSRA) is bound by the highest levels of confidentiality and therefore is not positioned to discuss individual firms. The FSRA is committed to supervising all regulated entities so they maintain high standards to address risks related to their activities. ADGM stands as a transparent jurisdiction and has relevant public information on registered and licensed entities by its independent regulatory authorities in ADGM available on the public register.”

As per its license, AC Limited (Hayvn) is not permitted to deal with Retail Clients and is restricted to USD 1 million in total assets (Fiat and Accepted Virtual Assets) for a maximum of 100 clients.

When the same questions were posed to Ahmed W Ismail Co-Founder, Board Member & Operating Committee Member of HAYVN, he replied with this statement, “I can confirm that there has been a change of management at HAYVN. The CEO stepped down from the management of the business, following a request from the Board of Directors. Client funds are safe and there will be no disruption to the service of any clients. We continue to be a globally regulated business through our entities in Australia, Cayman and Lithuania.”

Hayvn was granted a license in ADGM in December 2021, allowing it to offer deals for investments, and virtual asset custody. In October 2023 Hayvn announced that had processed over 22 000 cryptocurrency transactions to date in 2023.

While back in August 2023 Swedish and UAE based Gayo aviation, a luxury travel company that offers aircraft management, consulting services, aircraft purchase and sales and flight deck services announced they were now offering crypto payments utilizing UAE HAYVN Pay.

In May Hayvn also announced that it had recorded returns of 19 percent increase on its crypto index fund since its launch in January 2023. The index fund  included the top 20 digital assets by market capitalization with a maximum weighting of 10% for any asset to increase diversification. It is a broad based index strategy with monthly rebalancing.

In short Hayvn was busy partnering and launching products.  It partnered with WooCommernce to offer a plug-in allowing merchants to create an additional revenue stream by accepting cryptocurrency payments from customers globally. It also partnered with crypto hardware manufacturer, Ledger to provide safe and robust off-ramping rails to users of Ledger’s Ledger Live service, as well as strategic partnership with Akurateco, a cutting-edge white-label payment software vendor operating worldwide to broaden crypto payments, and finally the most recent partnership with Malta based Apcopay, a Single Layer – Payments Orchestration Platform which they noted was crucial to HAYVN Pay’s global expansion strategy, providing an alternative payment avenue for businesses.

This flurry of activity while to many looks like reflections of growth and expansion could also have been a cover up for activities that led to the current situation Hayvn is in today.

Could the rushed technology upgrade implemented just before Flinos’s resignation which created widespread disruptions for Hayvn Pay Clients been part and one of the issues realted to the misconduct of the CEO?

These questions and many more should become clearer as the Abu Dhabi Global Market regulator investigates, and as Hayvn’s new leadership takes form.