- ADGM’s Financial Services Regulatory Authority recognises the growing relevance of NFTs.
- It is not proposing to establish a formal regulatory framework at this time.
- However, the FSRA is open to NFT activities.
Abu Dhabi Global Market’s (ADGM) Financial Services Regulatory Authority (FSRA) has released a consultation paper seeking views on proposed enhancements to its capital markets regulatory framework, including NFT activities that might be undertaken in the financial centre.
ADGM is an international financial centre and free zone in the United Arab Emirates. In the consultation paper released today, the FRSA dedicated a page to virtual assets and non-fungible tokens.
It stated that the FRSA “recognises the growing relevance of NFT markets within the wider markets for digital assets”, but it’s not proposing to establish a formal regulatory framework at this time as NFTs are comparable“intellectual property rights over unique creations” and may not constitute financial instruments.
According to Coindesk, the FRSA started looking at NFTs six months ago. Speaking to Coindesk, ADGM’s CEO, Emmanuel Givanakis, said: “At this stage, the way we’re trying to do it is to gradually bring them into our ecosystem.”
However, the FRSA is open to NFT activities being undertaken within ADGM in circumstances such as when a multilateral trading facility (MTF) wants to operate a market for the trading of NFTs.
The trading of these NFTs may only be initiated by regulated and active MTF/virtual asset custodians that are under ADGM.
Simon O’Brien, executive director for markets at the FSRA, told Coindesk that the regulator might “establish a new non-regulated entity within ADGM to work with NFTs, which will outsource regulated activities like custody and client onboarding back to the licensed firm.”
The FRSA also stated that firms in the ADGM “should also be aware that transactions in NFTs may also trigger the requirement to comply with the ADGM’s Anti-Money Laundering and Sanctions Rules (AML) Rules”.
ADGM introduced a regulatory framework for virtual assets in 2018. The newly issued consultation paper is open for comment until May 2022. O’Brien told Coindesk that “a number of firms” have expressed interest in giving their views.
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