Abu Dhabi Supervisory Authority Names Five Principles for Regulation of Cryptocurrencies

The regulator of the capital emirate of the UAE, in order to fulfill the plan to turn the country into a cryptohub, has developed principles for the supervision of digital assets.

The Financial Services Regulatory Authority (FSRA), the financial regulator of the Abu Dhabi Global Market Free Zone (ADGM), has published “Guidelines” on the oversight of cryptocurrencies on its website. The principles oblige market participants to comply with international standards in the field of combating money laundering (AML) and the financing of terrorism (CFT), as well as supporting economic sanctions. There are five principles of regulation of cryptocurrencies:

1. Internationally recognized regulatory framework;

2. Dynamic and market-oriented rules;

3. Risk-based proportional approach;

4. Cooperation and shared responsibility;

5. High standards of quality and service.

While in general the tone and content of the principles are consistent with standard declarations on how to make the market more dynamic, innovative and safe, there are some specific points. According to the principles, the legislative framework of the ADGM will be based on English law.

Within the Abu Dhabi Economic Zone, the functions of the regulatory body, the registrar of crypto companies and the court will be performed independently of each other. The Digital Assets Regulatory Committee is elected by the council to ensure independence of oversight. The principles imply compliance with international AML and CFT standards, close cooperation with other jurisdictions, and “financial sector oversight” within the FSRA function.

Back in 2021, the authorities of the emirate of Abu Dhabi announced the creation of a so-called sandbox, where cryptocurrency companies will be able to check projects for compliance with UAE law.