Abu Dhabi Puts Forward Legal Framework for Decentralized Tech
Authorities in Abu Dhabi, the capital of the United Arab Emirates (UAE) as well as an individual emirate within it, have published a proposed legislative framework for distributed ledger technology.
The consultation paper, titled “Proposal for a legislative framework for distributed technology foundations” was published earlier this month by the Abu Dhabi Global Market’s (ADGM) Registration Authority.
Promoting investor protection
The document covers a broad spectrum of aspects relative to digital assets and crypto entities, including corporate governance, insolvency and restructuring considerations, and data protection. The ADGM’s objective with the proposed policy is to advance investor protection, improve market integrity and efficiency, and build towards a comprehensive regulatory framework.
Specific proposals
More specifically, the policy would implicate an enhancement in the protection of whistle-blowers who report misconduct relative to ADGM-regulated companies. Under the proposal, new rules would be introduced to ensure that digital asset platforms operate in a fair and transparent manner. A requirement would be placed on regulated companies to disclose detailed information in relation to beneficial ownership and control structures. Furthermore, the policy seeks to bring about an improved dispute resolution process between the stakeholders involved in ADGM-regulated transactions.
Building upon an existing framework
The Abu Dhabi regulator’s current legal framework is built upon English common law. It has its own financial services regulator, the Financial Services Regulatory Authority (FSRA) which operates independently and is responsible for supervising and licensing financial institutions and market participants. The FSRA takes a principles-based approach, regulating those market actors attempting to maintain financial stability and integrity, promote market competition and innovation and ensure customer protection.
ADGM has sought to act on an international basis by signing agreements with regulatory bodies in the UK, Hong Kong and Singapore, in an effort to enable information sharing and cross-border cooperation.
Regulatory activity
At a national level, earlier this year the UAE enacted a digital assets regulatory framework. Earlier this week, the UAE also revealed a federal licensing system for crypto companies. In February, work began on a $2 billion initiative to nurture blockchain and Web3 startups via Hub71, the emirate’s tech ecosystem. The initiative provides startups with access to a broad range of support services as well as potential collaborations with government and investment partners.
According to the document, “this Consultation Paper is of interest to any persons operating or planning DLT projects, persons engaging in digital asset-related activities and their legal advisors, as well as DLT participants, associations, and stakeholders.”
With that, the ADGM is inviting comments and feedback from members of the public on the proposed changes contained within the consultation paper. To aid public comment, the policy document includes a number of questions that it invites stakeholders to consider as they work towards submitting their feedback.
Those interested have until May 12 to take the opportunity to submit their comments and views relative to the Abu Dhabi regulator’s proposed framework.
