When firms are considering setting up in one of the Free Zones in the UAE the decision comes down to the their specific requirements and the type of business they would like to undertake. For those operating in the crypto space, Abu Dhabi Global Markets (“ADGM”) is currently the only option and their offering is proving to be very attractive.
Currently in the spotlight on the international stage, crypto assets are causing regulators around the world to ask themselves what they should do with this new form of “asset”. The ADGM has taken the initiative by setting out its regulatory stance in relation to this new and increasingly popular offering. Following extensive industry consultation, the ADGM’s regulator, the Financial Services Regulatory Authority (FSRA), have issued their regulations - Operating a Crypto Asset Business (OCAB). This innovative regime meets both the demand from this developing industry as well as the need for consumer protection.
What does an OCAB Licence Cover?
The OCAB regulations have been designed around a Spot Crypto Asset Framework, with the crypto asset being treated as a “commodity” and, therefore, not deemed to be a “Specified Investment” under the FSRA’s Financial Services and Market Regulations. However, pursuant to the Spot Crypto Asset Framework, market intermediaries dealing in or managing Crypto Assets (e.g. broker dealers, custodians, asset managers) and crypto asset exchanges will need to be licensed/approved by the FSRA as OCAB licence holders, and only activities in Accepted Crypto Assets will be permitted. If the firm wishes to undertake both OCAB and other financial services, it will need to apply for those services in addition to the OCAB licence.
What should you do now?
If you are considering making an application to the FSRA you should start discussions with them at an early stage and be prepared that the application process will require time, documentation and explanation until all concerned are comfortable that the business can “go live”.
We are experienced in supporting firms through this process. Should you wish to make an application, our team in the UAE are well positioned to assist you.