The FSRA is proposing to adopt a "risk-based and proportionate approach to FRT issuance in response to industry demand, based on appropriate regulatory requirements that incorporate the necessary safeguards to ensure that FRT issuers operate in a safe and sound manner and informed by current practices in leading jurisdictions."  

Issuance of FRTs would constitute a new "Regulated Activity, distinct from the issuance of Stored Value within the Financial Services and Markets Regulations 2015, with commensurate conduct of business and prudential requirements."

The consultation period closes on 3 October 2024.

The MoU creates a framework enabling the collaboration between the BMA and the FSRA to support the establishment of digital assets entities across their jurisdictions and ensure their effective supervision. This framework encompasses regulatory and supervisory cooperation, investigative assistance and capacity enhancement initiatives.

This newly implemented legislative structure is designed to provide a "comprehensive framework for DLT Foundations and Decentralised Autonomous Organisations (DAOs), enabling them to operate and issue tokens recognising the unique needs of the Blockchain industry." 

The Notice covers:

• Characteristics of virtual currencies
• The use of virtual currencies for money launder and terrorism financing
• Money laundering and virtual currencies - domestic perspective
• Red flag indicators
• Key recommendations for financial institutions and the private sector
• Case studies.

Key proposals for the Regulations cover: the structure of the DLT Foundations; governance and control; tokens; reporting, disclosures and publication; beneficial ownership; supervision; insolvency and liquidation / voluntary strike off.

Deadline for comments is 12 May 2023.