FSRA

Overview

Abu Dhabi Global Market is a financial free zone with its own legal system based on English common law, its own courts, and its own financial regulator, the FSRA.

That matters commercially. An institutional counterparty asked to face a UAE entity is usually more comfortable when the governing law and the courts are ones its own counsel already understands.

What it regulates

The FSRA has regulated virtual-asset activity since 2018, which makes it the longest-standing dedicated framework in the country.

• Accepted Virtual Assets — the assets a licensed firm may deal in, assessed against published criteria.
• Multilateral Trading Facilities for virtual assets, and custody.
• Broker-dealer and investment activities in virtual assets.
• Fund management, including funds with virtual-asset exposure.
• Fiat-referenced tokens, addressed by specific guidance.
• DLT Foundations, a vehicle for token projects, foundations and decentralised governance.

Who needs a permission

Any firm carrying on a regulated activity in or from ADGM. The instrument is a Financial Services Permission, and its scope is drawn narrowly: a firm does what its FSP says and nothing else.

Requirements

Capital. Category-based base capital and an expenditure-based requirement. The category is driven by the activities applied for.

Controlled functions. A Senior Executive Officer, Finance Officer, Compliance Officer and MLRO. The SEO must be resident in the UAE and be a real decision-maker.

Technology governance. Documented systems, custody and key management, resilience, and independent testing. For custody and MTF permissions this receives close attention.

Substance in ADGM. Premises and people on Al Maryah Island. This is not satisfied by a registered address.

Insurance. Professional indemnity proportionate to the permission.

Positioning against VARA and the DFSA

ADGM suits institutional exchanges, custodians, funds and foundation structures. The DIFC suits tokenised securities and wealth management. VARA suits businesses whose market is Dubai and whose counterparties are there.

The wrong reason to choose is that one sounds more prestigious. The right reasons are the counterparties, the governing law they expect, the activities each regulator will actually permit, and the cost of substance in each.

How we help

We scope the FSP to the activities the business needs and no more, prepare the regulatory business plan and financial projections, build the controlled function files, draft the technology and custody documentation the FSRA expects to see, and structure DLT Foundations where a token project needs a vehicle rather than a company.