The ADGM is the country's financial center and works with other world financial centers to develop a coherent policy on various trades and deals that pass through the country.
To enforce this new regulatory framework, the ADGM has appointed the country's Financial Services Regulatory Authority (FSRA) to keep a close watch on cryptocurrency deals taking place in the market and ensure that they follow the new regulations.
In a statement, the ADGM said
The framework is designed to address the full range of risks associated with crypto asset activities, including risks relating to money laundering and financial crime, consumer protection, technology governance, custody and exchange operations.
The framework itself is a result of a consultation opened by the FSRA on what the public wanted when it came to crypto regulation. This happened back on May 28 and resulted in several public comments that the ADGM took into account. Several refinements and modifications were made to ensure that the framework worked more smoothly and was in-line with the market's intentions. Notably, a daily value trading levy on crypto asset exchanges was added. This is to be on a sliding basis so the amount would be appropriate for the size of the exchange.
Abu Dhabi Global Market
New Regulations Explained To Investors
There have been numerous instances in the past when financial regulators impose new regulations but fail to explain them to the general market causing a lot of confusion. This will not be the case with the ADGM’s new regulations as the FSRA has released a detailed guide for the framework that covers everything in 34 pages. This includes just about everything a person dealing in cryptocurrencies should know as well as the requirements for opening up a new crypto business or exchange in the country.
To operate in the ADGM, businesses will need to apply for a Financial Services Permission. This permission is specifically for Operating a Crypto Asset Business (OCAB) and which shows that they are performing a regulated activity. This includes crypto exchanges and anyone acting as market intermediaries. Additionally, only accepted crypto assets will be allowed to do business.
The framework also adds in several rules about anti-money laundering and countering terrorist funding. OCAB permission holders are supposed to be aware of such risks and take steps to counter them from happening. This includes implementing strict know-your-customer laws and customer due diligence to ensure everything is legal and above board.
The regulatory framework covers a majority of digital assets like security tokens and crypto assets. However, dealing in non-security tokens is not covered by the framework are not regulated.