Abu Dhabi Global Market (ADGM) | DLT Foundation
The Distributed Ledger Technology (DLT) Foundation provided by Abu Dhabi Global Market (ADGM) is a legal structure announced in 2023 (law x, regulations), designed to support blockchain and digital asset projects. The ADGM DLT Foundation offers various benefits to encourage the influx of the global blockchain and digital asset community.
Applications and approvals can be processed through ADGM’s own financial regulatory authority, the Financial Service Regulatory Authority (FSRA).
※ Key Features and Considerations are as follows:
1. Regulated Token Issuance
– Features: It is not possible to start a fully decentralized protocol in the initial stage. A team is required to handle the initial token distribution and protocol deployment. Following the concept of “progressive decentralization,” a special purpose vehicle is registered in the first stage, followed by the registration of a new foundation in subsequent stages to establish the legal structure. The DLT Foundation has the feature of integrating the legal structure of initial token issuance and DAO into a single entity.
– Considerations: Legal compliance is required for initial token issuance, and there may be issues related to the legal status of tokens issued in a regulated environment.
2. Token-Based Programmable Governance
– Features: Most protocol native tokens have two main purposes:
– The right to participate in decentralized governance.
– Providing incentives to contributors and validators supporting the protocol. The DLT Foundation allows for the automated governance structuring through smart contracts without the need for bylaws, ensuring flexibility.
– Considerations: Legal issues related to the legal validity of smart contracts and DAO decisions must be taken into account.
3. Legal Protection for DAO Members
– Features: As a registered entity, the DLT Foundation offers limited liability protection to DAO members, reducing the risk of unlimited liability faced by unregistered DAOs.
– Considerations: Limited liability protection may not apply in all situations, and the foundation’s assets could be at risk in case of legal disputes.
4. Bridge Between On-Chain and Off-Chain Worlds
– Features: The DLT Foundation acts as a legal bridge between the virtual on-chain DAO and the regulated financial institutions and venture companies in the off-chain real world. This ensures that all legal contracts can be contractually enforced.
– Considerations: The legal bridge structure between on-chain and off-chain can be complex, requiring compliance with regulations such as AML (Anti-Money Laundering) and securities laws.
Applications and approvals can be processed through ADGM’s own financial regulatory authority, the Financial Service Regulatory Authority (FSRA).
※ Key Features and Considerations are as follows:
1. Regulated Token Issuance
– Features: It is not possible to start a fully decentralized protocol in the initial stage. A team is required to handle the initial token distribution and protocol deployment. Following the concept of “progressive decentralization,” a special purpose vehicle is registered in the first stage, followed by the registration of a new foundation in subsequent stages to establish the legal structure. The DLT Foundation has the feature of integrating the legal structure of initial token issuance and DAO into a single entity.
– Considerations: Legal compliance is required for initial token issuance, and there may be issues related to the legal status of tokens issued in a regulated environment.
2. Token-Based Programmable Governance
– Features: Most protocol native tokens have two main purposes:
– The right to participate in decentralized governance.
– Providing incentives to contributors and validators supporting the protocol. The DLT Foundation allows for the automated governance structuring through smart contracts without the need for bylaws, ensuring flexibility.
– Considerations: Legal issues related to the legal validity of smart contracts and DAO decisions must be taken into account.
3. Legal Protection for DAO Members
– Features: As a registered entity, the DLT Foundation offers limited liability protection to DAO members, reducing the risk of unlimited liability faced by unregistered DAOs.
– Considerations: Limited liability protection may not apply in all situations, and the foundation’s assets could be at risk in case of legal disputes.
4. Bridge Between On-Chain and Off-Chain Worlds
– Features: The DLT Foundation acts as a legal bridge between the virtual on-chain DAO and the regulated financial institutions and venture companies in the off-chain real world. This ensures that all legal contracts can be contractually enforced.
– Considerations: The legal bridge structure between on-chain and off-chain can be complex, requiring compliance with regulations such as AML (Anti-Money Laundering) and securities laws.
