ADGM’s FSRA Publishes Guidelines on Approach to Virtual Asset Regulation and Supervision

Abu Dhabi Global Market (ADGM), the International Financial Centre of the UAE’s capital city, announced today that its financial regulator, the Financial Services Regulatory Authority (FSRA), has published Guiding Principles on its approach to virtual asset regulation and supervision as a way to outline its expectations for the asset class and service providers in the sector.

The principles act as an accessible and easy to follow complement to ADGM’s comprehensive regulatory framework for spot virtual asset activities. They also aim to facilitate greater regulatory collaboration and cohesion between the FSRA and other authorities both in the UAE and globally. Furthermore, the guiding principles can also inform and educate the investor community and the general public about the regulatory actions the FSRA can take to identify and respond to underlying risks.

Specifically, the principles state the FSRA’s risk appetite and priorities for the sector, with each principle covering one of the key pillars of ADGM’s holistic approach, namely: a robust and transparent regulatory framework; high standards of authorisation; preventing money laundering and other financial crimes; risk-sensitive supervision; enforcement powers for regulatory breaches; and its commitment to international cooperation. They will therefore be of particular relevance to potential applicants to ADGM and other regulators with an interest in this area.

The principles stand as a reflection of the experience and expertise the ADGM’s FSRA has gathered since the introduction of the world’s first bespoke regulatory regime for virtual assets in 2018. When viewed together, the principles are calibrated to ensure customer protection, risk sensitivity, market integrity, financial stability, and confidence in the ecosystem. All of these establish ADGM’s vibrant virtual asset community as a destination of choice for the best-in-class virtual asset companies and investors.

In light of recent market developments and the diversity of views on the sector’s future, ADGM is committed to engaging with the industry to support its continuous transformation and innovation. The focus remains on maintaining a dynamic yet robust regulatory framework and approach that can respond to changes in the sector’s risk profile. Recognising the cross-border nature of the asset class, the FSRA believes that ongoing cooperation between regulators is imperative to prevent harmful regulatory arbitrage.

Emmanuel Givanakis, CEO of the FSRA, said, “These guiding principles will provide greater clarity to investors, other regulators, industry and the wider public of our approach to regulation in this area and key expectations we have set on current virtual asset service providers in ADGM and potential applicants. They also outline the tools we have at our disposal to mitigate the material risks that are born from these activities and the regulatory powers to identify and act upon any misconduct. Consistent with the FSRA’s broader strategy to align with international best practices, these principles make clear the high standards of our framework at a time of increased volatility and regulatory focus.”