Abu Dhabi Financial Regulator Preparing Legal Framework for Cryptocurrencies and ICOs
Abu Dhabi’s financial regulator is developing a legal framework to regulate cryptocurrency trading and initial coin offerings (ICOs) on the territory of the Emirate.
In an official announcement published Sunday, Feb. 11, the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM) announced plans to develop a “robust, risk-appropriate regulatory framework to regulate and supervise activities of virtual currency exchanges and intermediaries.”
The FSRA will base these new regulations on a guidance issued on October 9, 2017, in which the authority first outlined its proposed regulatory approach. The guidance recommends that virtual currencies be “treated as commodities” while ICOs which “exhibit the characteristics of Specified Investments” will “be regulated as such within FSRA’s regulatory framework.”
However, the FSRA also noted that “ICO tokens and virtual currencies do not always fit neatly into existing regulatory classifications” and that the authority “intends to consult and work closely with industry participants and relevant professional bodies” to help clarify the legal grey zones which will inevitably occur with certain cryptocurrency projects.
In their statement, the FSRA underlined that cryptocurrencies feature “risks and concerns,” but noted that “virtual currencies, although not legal tender, are gaining interests globally as a medium of exchange for goods and services.”
The UAE Securities and Commodities Authority (SCA) warned investors on Feb. 4 that they must assume all risks associated with investing in digital tokens until regulations are put in place.