The Abu Dhabi Global Market’s (ADGM) Registration Authority has unveiled a proposed legislative framework for distributed ledger technology (DLT) projects in the United Arab Emirates (UAE).
The ADGM, which is a financial centre in the UAE, aims to regulate disclosure, governance structures, and liquidation related to DLT. The framework includes a specialized licensing system for companies that provide virtual asset-related services overseen by the financial regulator.
While the regulator aims to address service and governance issues, it does not function as a financial watchdog for the ADGM. This regulatory framework is part of the ADGM’s broader efforts to promote and regulate the adoption of emerging technologies, such as DLT, in the UAE’s financial services sector.
The proposed “DLT Foundations Regulations 2023” aims to establish a specific legislative framework that takes into account features such as decentralized autonomous organizations (DAOs) that are preferred governance structures for decentralized initiatives. This framework is intended to attract developers of distributed ledger technology (DLT) projects and promote their growth.
In addition to reporting, disclosure, and publication requirements, the proposed recommendations for distributed ledger technology (DLT) foundations also cover insolvency and liquidation procedures. The Consultation Paper notes that it is relevant to anyone involved in DLT projects, those engaging in digital asset-related activities, their legal advisors, and industry participants, associations, and stakeholders.
The proposed “DLT Foundations Regulations 2023” regulatory framework is currently open for feedback until May 12th.
To attract blockchain and cryptocurrency businesses to the region, Abu Dhabi and Dubai emirates in the United Arab Emirates have been working to establish regulations in order to attract blockchain and cryptocurrency businesses to the region.
The UAE unveiled federal licensing rules for virtual asset service providers looking to operate in the country last week. Dubai introduced a legal framework for cryptocurrency earlier this year. In February, Abu Dhabi announced a $2 billion initiative to support Web3 projects.
Meanwhile, businesses that want to offer virtual asset services in the UAE can now apply for a license with the Securities and Commodities Authority (SCA), the country’s federal financial regulatory body.
The SCA announced that it would accept licensing applications from virtual asset service providers (VASPs), except those who already hold a license from a financial-free zone. The SCA requires all VASPs operating in the UAE to submit a license application and obtain approval from the regulator.
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