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Abu Dhabi Global Markets (ADGM) Seeks Feedback on Proposed DLT Legal Framework

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According to reports, the Abu Dhabi Global Markets (ADGM) Registry is seeking feedback on its proposed Distributed Ledger Technology (DLT) legislative framework, with the goal of d

Abu Dhabi Global Markets (ADGM) Seeks Feedback on Proposed DLT Legal Framework

According to reports, the Abu Dhabi Global Markets (ADGM) Registry is seeking feedback on its proposed Distributed Ledger Technology (DLT) legislative framework, with the goal of disclosure, liquidation, and governance structures. ADGM is an international financial center within the United Arab Emirates (UAE) and has developed a customized licensing system for virtual asset service providers regulated by its financial regulatory authorities.

Abu Dhabi Global Market Registry is seeking feedback on its proposed legislative framework for distributed ledger technology

The Abu Dhabi Global Markets (ADGM) Registry is seeking feedback on its proposed Distributed Ledger Technology (DLT) legislative framework. This new framework aims to cover disclosure, liquidation, and governance structures. As an international financial center within the United Arab Emirates (UAE), the ADGM has developed a customized licensing system for virtual asset service providers (VASPs) that are regulated by its financial regulatory authorities.
This article will provide an overview of the proposed DLT legislative framework and what it means for VASPs operating within the ADGM jurisdiction.

Overview of the Proposed DLT Legislative Framework

The ADGM has recognized the need for a legal framework that can govern the use of distributed ledger technology. This framework proposes to establish a set of rules that will promote transparency, stability, and protection for both investors and VASPs. The proposed framework covers three main areas:

Disclosure

Under the proposed framework, VASPs will need to disclose specific information about their operations to ensure transparency. This includes disclosing the names of the VASPs’ key individuals, details of the virtual assets they handle, and any material conflicts of interest. The ADGM believes that disclosure is crucial to ensure operational transparency, which is essential for investor protection.

Liquidation

The proposed DLT legislative framework also covers liquidation. This means that VASPs will need to have a clear and efficient plan in place for how they would manage their assets if they were to become insolvent. This is important to ensure that investors are protected in the event of a VASP’s insolvency.

Governance Structures

The final area that the proposed framework covers is governance structures. This means that VASPs must establish clear internal governance structures that promote transparency and accountability. This includes putting in place policies and procedures that outline how conflicts of interest are managed, how information is disclosed and how the VASP manages incidents such as cyber-attacks.

What Does This Mean for VASPs in the ADGM?

If the proposed DLT legislative framework is passed, VASPs operating in the ADGM jurisdiction will need to ensure that they comply with the new regulatory requirements. This means that VASPs will need to ensure that they have transparency in their operations, have a clear and efficient plan in place for managing their assets, and have appropriate governance structures.
It is important for VASPs to take the proposed DLT legislative framework seriously as failure to comply with the new regulatory requirements could result in regulatory action. This could include fines or even revocation of the VASP’s license to operate within the ADGM jurisdiction.

Conclusion

The ADGM’s proposed DLT legislative framework aims to promote transparency, stability, and protection for both investors and VASPs. This new framework covers three main areas, including disclosure, liquidation, and governance structures. If the framework is passed, VASPs will need to ensure that they comply with the new regulatory requirements or face regulatory action.

FAQs

What Is the ADGM?

The Abu Dhabi Global Markets (ADGM) is an international financial center within the United Arab Emirates.

What Are VASPs?

Virtual Asset Service Providers (VASPs) refers to individuals or entities that provide services for users to buy, sell, exchange, and store virtual assets.

Why Is Governance Important for VASPs?

Appropriate governance structures help to ensure transparency and accountability within the VASPs’ operations. This is important for investor protection and to prevent misconduct or potential fraud.

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