Abu Dhabi Global Market (ADGM) | Virtual Asset Business Activity Guide
If you are considering virtual asset business activities in Abu Dhabi Global Market (ADGM), learn more about ADGM’s virtual asset-related regulatory activities through the key points below.
▶ Virtual Asset Regulatory Activities
1. Licensing Requirements:
① To conduct virtual asset regulatory activities, you must obtain a Financial Services Permission (FSP) from the Financial Services Regulatory Authority (FSRA). The issued FSP specifies the regulated activities that the licensee can perform. ADGM, although located in Abu Dhabi, has independent legal jurisdiction, and the FSRA is the financial regulatory authority exclusively for ADGM, responsible for setting regulations and granting business licenses for financial activities.
② Regulated Activities:
– Operating a Multilateral Trading Facility (MTF): The institution must have an operational system and control mechanisms similar to existing financial exchanges, including market surveillance, fair and orderly trading processes, settlement processes, transaction records, rules, transparency, and disclosure mechanisms.
– Providing Custody Services: Authorized persons providing custody services must comply with asset protection and client fund regulations, submit regular reconciliation reports, and maintain appropriate internal control systems to protect virtual assets and client funds.
③ Additional Business Activities Beyond Approved Operations:
Authorized persons can only perform activities related to virtual assets. Any other business activities require additional approval from the FSRA and must meet the respective requirements.
2. Regulatory Requirements for Approved Firms
① General Compliance:
All approved firms must comply with Chapter 17 of the FSRA’s Conduct of Business Rulebook (COBS), which includes general and specific rules necessary to conduct activities related to virtual assets. Additionally, they must adhere to other relevant FSRA rulebooks such as the General Rulebook (GEN), Anti-Money Laundering and Sanctions Rules and Guidance (AML), and Market Conduct Rules (CMC).
② Recognized Virtual Assets:
Only virtual assets approved by the FSRA (recognized virtual assets) can be used for regulated activities. The FSRA determines the eligibility of assets by considering factors such as market maturity, security, and potential risks associated with the virtual asset.
③ Technology Management:
Approved firms must have systems and controls in place related to virtual asset wallets, private keys, the origin and destination of virtual asset funds, security, risk management, and system recovery.
Regulatory approval is essential for all business activities related to virtual assets, especially those involving the custody of customer assets. Even after approval, it is crucial to maintain transparency by disclosing major risks to customers and conducting regular monitoring and updates. Meanwhile, for virtual asset-related businesses that are not subject to FSRA’s financial regulations, there are cases where companies are established and operated as non-financial general corporations without obtaining an FSP.
▶ Virtual Asset Regulatory Activities
1. Licensing Requirements:
① To conduct virtual asset regulatory activities, you must obtain a Financial Services Permission (FSP) from the Financial Services Regulatory Authority (FSRA). The issued FSP specifies the regulated activities that the licensee can perform. ADGM, although located in Abu Dhabi, has independent legal jurisdiction, and the FSRA is the financial regulatory authority exclusively for ADGM, responsible for setting regulations and granting business licenses for financial activities.
② Regulated Activities:
– Operating a Multilateral Trading Facility (MTF): The institution must have an operational system and control mechanisms similar to existing financial exchanges, including market surveillance, fair and orderly trading processes, settlement processes, transaction records, rules, transparency, and disclosure mechanisms.
– Providing Custody Services: Authorized persons providing custody services must comply with asset protection and client fund regulations, submit regular reconciliation reports, and maintain appropriate internal control systems to protect virtual assets and client funds.
③ Additional Business Activities Beyond Approved Operations:
Authorized persons can only perform activities related to virtual assets. Any other business activities require additional approval from the FSRA and must meet the respective requirements.
2. Regulatory Requirements for Approved Firms
① General Compliance:
All approved firms must comply with Chapter 17 of the FSRA’s Conduct of Business Rulebook (COBS), which includes general and specific rules necessary to conduct activities related to virtual assets. Additionally, they must adhere to other relevant FSRA rulebooks such as the General Rulebook (GEN), Anti-Money Laundering and Sanctions Rules and Guidance (AML), and Market Conduct Rules (CMC).
② Recognized Virtual Assets:
Only virtual assets approved by the FSRA (recognized virtual assets) can be used for regulated activities. The FSRA determines the eligibility of assets by considering factors such as market maturity, security, and potential risks associated with the virtual asset.
③ Technology Management:
Approved firms must have systems and controls in place related to virtual asset wallets, private keys, the origin and destination of virtual asset funds, security, risk management, and system recovery.
Regulatory approval is essential for all business activities related to virtual assets, especially those involving the custody of customer assets. Even after approval, it is crucial to maintain transparency by disclosing major risks to customers and conducting regular monitoring and updates. Meanwhile, for virtual asset-related businesses that are not subject to FSRA’s financial regulations, there are cases where companies are established and operated as non-financial general corporations without obtaining an FSP.
