Abu Dhabi wants eyes open wide via digital currency guide
The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) has set out its approach to initial coin offerings (ICOs) and virtual currencies under the Financial Services and Markets Regulations (FSMR).
It cites the usual stuff that distributed ledger technology (DLT) has “extraordinarily wide application to financial services and markets as a whole” but that a “one size fits all” approach to virtual tokens is “inappropriate”. As a result, the FSRA’s guidance offers regulatory clarifications on using such technology in its jurisdiction.
Richard Teng, chief executive director, FSRA of ADGM, wants people to “engage us early to gain insights into the applicable regulatory regime”.
In fact, Teng’s words are the main thrust of its advice – i.e. contact us, so we can help.
The guidance also sets out that virtual currencies are treated as commodities, and advises caution to those seeking outsized investment returns due to their price volatility.
The FSRA adds that it is “acutely aware that ICOs do not always fit neatly into existing regulatory classifications”. Its approach is set out here. It says it will regularly review and update its rules and regulations.
Last month, the UK’s Financial Conduct Authority was one step ahead of Abu Dhabi and issued a similar warning to consumers about the risks of ICOs. It called them “very high-risk, speculative investments”.