The amendments reflect ADGM’s "commitment to safeguarding the stability and integrity of the financial services sector" and include integration of cyber risk management into existing risk management frameworks.

There is a six-month transition period to facilitate compliance.

The amended legislation can be viewed here: FSRA Rules (Cyber Risk Management) | Rulebook.

The implementation of these amendments follows extensive industry engagement and feedback received on Consultation Paper No. 11 of 2024.

The focus of the implemented amendments is on revisions to the process whereby "virtual assets (VAs) are accepted for use as Accepted Virtual Assets (AVAs) in ADGM, alongside appropriate capital requirements and fees for Authorised Persons conducting Regulated Activities in relation to VAs (VA Firms)."

The amendments also introduce a "specific product intervention power in relation to VAs" as well as enshrining rules that confirm its existing approach to the prohibition of using privacy tokens and algorithmic stablecoins within ADGM.

Finally, the amendments expand the scope of investments in which Venture Capital Funds may invest.

The FSRA has updated the Guidance – Regulation of Virtual Asset Activities in ADGM to reflect the implemented measures and to provide further guidance to VA Firms in relation to applying the AVA assessment criteria.

For the amended legislation see here.

The framework introduces several components that establish standards for FRT issuers to ensure financial stability and investor protection:

• Reserve Assets – minimising the risks of variability in the value of FRTs by setting strict requirements on the constituents of reserve assets.
• Governance and Integrity – implementing periodic independent attestation and stress testing obligations.
• Transparent Disclosure – setting out requirements for detailed whitepapers and ongoing disclosures covering operational aspects, risks, and rights of FRT holders.
• Prudential Safeguards – setting clear capital adequacy requirements and business restrictions.
• Redemption Rights – ensuring FRT holder rights to redeem FRTs at par value within defined timeframes.

The framework makes "FRT issuance a distinct Regulated Activity within ADGM's comprehensive financial services regulatory regime."  It has been designed to be "risk-proportionate while ensuring FRT issuers operate in a safe and prudent manner." 

The formalisation of this framework follows industry engagement and feedback received on Consultation Paper No. 7 of 2024. 

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.