ADGM/FSRA Virtual Asset Framework Abu Dhabi Global Market's Financial Services Regulatory Authority provides a comprehensive framework for virtual asset activities through its Accepted Virtual Assets (AVAs) regime and VASP licensing.
Updated 2023
Source: Abu Dhabi Global Market (ADGM) - FSRA

What Is ADGM/FSRA?

Abu Dhabi Global Market (ADGM) is an international financial centre in Abu Dhabi with its own civil and commercial laws based on English common law. The Financial Services Regulatory Authority (FSRA) is ADGM's independent regulator responsible for authorizing and supervising financial services.

ADGM was among the first jurisdictions globally to establish a comprehensive virtual asset regulatory framework, launching its initial guidance in 2018 and continuously updating it since.

What Is FSRA's Regulatory Scope?

Geographic Jurisdiction

  • Abu Dhabi Global Market free zone
  • Separate from VARA (Dubai) and SCA (UAE onshore)
  • Common law legal framework
  • Own courts and dispute resolution

Virtual Asset Activities

  • Operating a multilateral trading facility (MTF) for virtual assets
  • Operating a virtual asset custodian
  • Dealing in virtual assets as principal or agent
  • Managing virtual asset portfolios
  • Arranging virtual asset transactions
  • Advising on virtual assets

What Is the Accepted Virtual Assets (AVA) Framework?

AVA Concept

  • FSRA maintains a list of Accepted Virtual Assets
  • Only AVAs can be offered by licensed firms
  • AVA status based on technology, governance, and market factors
  • Regular review and updates to AVA list

AVA Criteria

  • Technology maturity and security
  • Governance and transparency
  • Market liquidity and price discovery
  • Regulatory treatment in other jurisdictions
  • Risk profile and use cases

Fiat-Referenced Virtual Assets

  • Specific category for stablecoins within AVA framework
  • Additional requirements for fiat-backed tokens
  • Reserve and redemption standards
  • Major USD stablecoins typically included

What Are FSRA's Licensing Requirements?

Financial Services Permission (FSP)

  • Required for all virtual asset activities in ADGM
  • Specific endorsements for different activity types
  • Capital requirements based on activities
  • Technology and operational standards

Application Requirements

  • Detailed business plan and regulatory business plan
  • Controllers and senior management fit and proper
  • Capital adequacy demonstration
  • Technology infrastructure assessment
  • AML/CFT framework and policies
  • Custody and safeguarding arrangements

Ongoing Compliance

  • Regular prudential returns
  • Annual audited financial statements
  • Compliance monitoring and reporting
  • Technology and cybersecurity reviews
  • AVA-only restriction enforcement

How Does FSRA Treat Stablecoins?

Fiat-Referenced Virtual Assets

  • Stablecoins classified as Fiat-Referenced Virtual Assets (FRVAs)
  • Subject to AVA acceptance process
  • Major stablecoins typically on AVA list
  • Trading and custody permitted for accepted FRVAs

Issuer Requirements

  • FRVA issuance from ADGM requires specific authorization
  • Reserve backing and custody requirements
  • Redemption rights and procedures
  • Transparency and audit obligations

CBUAE Coordination

  • Payment-focused stablecoin use requires CBUAE consideration
  • Investment/trading use falls under FSRA
  • Cross-border stablecoin services need careful structuring

What Should Financial Institutions Consider?

  • ADGM offers established, mature virtual asset framework
  • AVA regime provides regulatory clarity on permitted assets
  • Common law environment familiar to international firms
  • Abu Dhabi positioning as alternative to Dubai
  • Strong institutional focus and sovereign wealth fund presence
  • Coordination with CBUAE essential for stablecoin payment activities

The Coinbax Perspective

ADGM/FSRA pioneered virtual asset regulation in the Middle East, and its framework reflects years of refinement. The Accepted Virtual Assets regime provides a curated approach—only approved assets can be offered, which creates regulatory certainty but limits flexibility.

For stablecoins, FSRA's Fiat-Referenced Virtual Asset category provides clear treatment for custody and trading. Major stablecoins are typically accepted, enabling institutional services. Issuance from ADGM is possible but requires meeting stringent standards.

ADGM competes with DIFC and VARA for virtual asset business. Its advantages include regulatory maturity, Abu Dhabi's sovereign wealth ecosystem, and a common law framework. Financial institutions should evaluate all three Dubai/Abu Dhabi options based on their specific business model and client base.

Frequently Asked Questions

What's the difference between ADGM and DIFC?

Both are financial free zones with common law frameworks, but ADGM is in Abu Dhabi while DIFC is in Dubai. ADGM/FSRA has a dedicated virtual asset framework with the AVA regime, while DFSA focuses more on investment tokens and securities.

What stablecoins can be traded in ADGM?

Only stablecoins on FSRA's Accepted Virtual Assets list can be offered by licensed firms. This typically includes major USD-backed stablecoins like USDC and USDT, subject to FSRA's ongoing assessment.

Can I issue a stablecoin from ADGM?

Yes, but stablecoin issuance requires specific authorization and meeting FSRA's requirements for Fiat-Referenced Virtual Assets, including reserve backing, custody, and transparency standards. This is a more complex undertaking than obtaining a trading or custody license.