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Abu Dhabi Global Markets’ financial regulator, the Financial Services Regulatory Authority (FSRA), recently published six principles that will guide its “approach to the regulation of virtual assets.” Although not legally binding, according to the FSRA, the principles must “be seen as complementary to the comprehensive details of our published framework”.
“The Foundation for Regulatory Cohesion Across Jurisdictions”
The United Arab Emirates (UAE)-based financial hub and global free zone Abu Dhabi Global Market (ADGM) recently published six guiding principles for the regulation of virtual assets. The principles, announced by its financial industry regulator, the Financial Services Regulatory Authority (FSRA), are designed to “support collaboration with other like-minded regulators within and outside the UAE”.
Although not legally binding, according to the FSRA, the principles must “be seen as complementary to the comprehensive details of our published framework”. According to the regulator, the six principles could be the basis for “regulatory cohesion across jurisdictions”.
In addition to “providing an accessible view” of FSRA’s priorities in this area, these principles also reflect the regulator’s risk appetite in regulatory-related areas.
“Each principle is the FSRA’s statement of risk appetite in the regulatory domain,
Licensing, financial crime, regulation, law enforcement and international cooperation. Taken as a whole, these expectations are calibrated to ensure the right balance is struck between confidence in our ecosystem, risk sensitivity, customer protection and attracting new entrants,” the regulator explained.
High authorization standard
as the picture shows document outline A key attribute of each approach to regulating virtual assets, the first principle of the FSRA calls for the creation of a “robust and transparent risk-based regulatory framework”. On the one hand, such a framework should “introduce a clear taxonomy that defines VAs (virtual assets) as commodities in the broader digital asset space, and requires licensing of entities engaged in regulated activities using VAs within the ADGM. “
On the other hand, the same framework should give licensed virtual asset entities “the same regulatory status in the ADGM as any other licensed entity.”
At the same time, the second principle calls for maintaining high standards in delegation. The FSRA claims that preventing financial crime and money laundering is another key factor guiding the regulation of virtual assets. The commitment to use enforcement tools in the event of breaches by licensed entities is another principle guiding regulators.
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Image Source: Shutterstock, Pixabay, Wiki Commons
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