You are hereHome CountriesTop News
Abu Dhabi Global Market sets out guidance on Initial Coin Offerings and virtual currencies
Source: ADGM , Author: Posted by BI-ME staff
Posted: Mon October 9, 2017 12:31 pm

UAE: The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) has set out in Guidance its approach to Initial Coin/Token Offerings (ICOs) and virtual currencies under the Financial Services and Markets Regulations (FSMR). 

Distributed Ledger Technology (DLT) has extraordinarily wide application to financial services and markets as a whole. Virtual tokens, at their most basic, are pieces of information recorded on a DLT network. Among others, tokens can represent a medium of exchange such as a virtual currency, a regulated financial instrument such as a share, or a person’s identity record. 

A “one size fits all” approach to virtual tokens is therefore inappropriate. In this Guidance, FSRA sets out its approach to ICOs and virtual currencies to offer regulatory clarifications on using such technology in its jurisdiction. 

ICOs represent a novel and potentially more cost-effective way of raising funds for companies and projects. However, the form and quality of transparency of ICOs varies greatly from issuance to issuance. Some market players wish to use ICOs to raise funds in a transparent and robust fashion, whereas others provide very limited or no information beyond a code script, and in these latter cases the risk of fraud is extremely high. Best practice standards, particularly in the unregulated space, are therefore strongly encouraged.

The FSRA’s Guidance provides clarifications for those who seek to use ICOs to raise funds, and those who are considering investing in them. Those ICOs comprising tokens which exhibit the characteristics of Specified Investments will be treated as such within FSRA’s regulatory framework. The Guidance also sets out that virtual currencies are treated as commodities, and advises caution to those seeking outsized investment returns due to their price volatility.

As the financial services regulator, the FSRA is acutely aware that ICOs do not always fit neatly into existing regulatory classifications. The FSRA therefore encourages market participants using ICOs to approach FSRA as early as possible in their fundraising lifecycle to determine a proportionate and appropriate treatment within the regulatory regime.

Mr Richard Teng, Chief Executive Director, FSRA of ADGM, said, “ICOs have transformed the capital formation landscape and global regulatory frameworks are evolving to adapt to such innovation.   Participants exploring the issuance of ICOs that offer real value to the market and wish to operate within our regulatory framework are encouraged to engage us early to gain insights into the applicable regulatory regime”.

The FSRA’s full approach to ICOs and virtual currencies is set out in this guidance. The FSRA will regularly review and update its financial services rules and regulations to maintain a robust and highly effective market, and encourages industry feedback regarding its approach.

About Abu Dhabi Global Market
Abu Dhabi Global Market (ADGM), an international financial centre located in the capital city of the United Arab Emirates, opened for business on 21st October 2015.    In line with the Abu Dhabi’s Economic Vision, ADGM is a natural extension of Abu Dhabi’s role as a reliable and responsible member of the global financial community.

Strategically situated in Abu Dhabi, home to one of the world’s largest sovereign wealth funds, ADGM plays a pivotal role in positioning Abu Dhabi as a global centre for business and finance that connects the growing economies of the Middle East, Africa and South Asia.

ADGM’s three independent authorities, the Registration Authority, the Financial Services Regulatory Authority and ADGM Courts, enable registered companies to conduct business in a zero-percent tax environment and operate with confidence within an international regulatory framework with its own independent judicial system and legislative infrastructure based on the Common Law.

Established by a UAE Federal Decree as a broad based financial centre, ADGM’s foundation is anchored on three of Abu Dhabi’s strategic strengths - private banking, wealth management and asset management and will continually expand its financial services in response to the needs of its businesses and marketplace.

Overview of ADGM’s FinTech Achievement and Commitment
As an IFC and FinTech Hub ADGM has accomplished notable milestones and established strategic partnerships to bolster the FinTech ecosystem since March 2016.  ADGM is also the first in the MENA region to establish a dedicated and open regulatory framework in November to licence FinTech stakeholders and launched a Regulatory Laboratory (Reglab)* – a regulatory sandbox - that offers a controlled environment for FinTech innovators to develop and test their products and services. 

To-date, ADGM has established about eight FinTech bridges with key IFCs and jurisdictions in the recent six months.  These cross-border partnerships enable ADGM to maintain a practical, open and inclusive global FinTech centre that has been serving the communities in Abu Dhabi and the greater MENA region.

As a global FinTech Hub, ADGM continues to enhance its international network with the MENA region, Asia, Australia, US, UK, Europe to facilitate greater access to markets, capital and regulatory recognition for Fintech players. ADGM actively engages its stakeholders, forge partnerships and collaborations to develop a conducive and effective FinTech ecosystem.

ADGM will be hosting its first FinTech Abu Dhabi event, under the auspicious patronage of His Highness Sheikh Hazza bin Zayed Al Nahyan, Vice Chairman of the Abu Dhabi Executive Council, from 22 to 23 October 2017.  

For more details of the ADGM’s FinTech Abu Dhabi event, visit www.fintechabudhabi.com to register interest.

ADGM is located on Al Maryah Island, a 114-hectare development that is home to world-class business and lifestyle facilities such as the Rosewood and Four Seasons Hotels and Residences, the first ever specialty Cleveland Clinic Hospital outside of USA, luxury retail at the Galleria Mall, and grade-A offices spaces to meet Abu Dhabi’s long-term development and economic needs. All these complement ADGM’s international financial centre position as a vibrant destination in the capital city in Abu Dhabi. For more details of ADGM, please visit www.adgm.com or follow us on Twitter : @adglobalmarket, @FinTechAD, #FinTechAD, and Linked : ADGM

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

date:Posted: December 11, 2017
UAE. Many companies are exploring how they can take advantage of disruptive technologies such as cloud, mobile and big data analytics to drive a new wave of end user experiences.
date:Posted: December 11, 2017
UAE. "The primary objective of any strategy should be to improve student outcomes through removing barriers to learning and improving students' social, emotional and behavioural learning and wellbeing."
date:Posted: December 10, 2017
UAE. Declining reserves and revenues, along with rising domestic energy demand, require a shift to enable performance and sustainability.
dhgate