Regulated exchanges in Abu Dhabi might be approved with the right to trade non-fungible tokens.
On Monday, Abu Dhabi Global Market (ADGM), the free zone of the Emirates, released a consultation paper titled “Proposals for upgrades to capital markets and virtual assets in ADGM.” The publication includes proposed Non-Fungible Token (NFT) trading guidelines, among other asset types. The report further stated that companies and businesses holding a license from the free zone’s financial regulator would be permitted to facilitate NFT trading.
In consort with the sections dedicated to traditional financial instruments, the document included a little more than a page on virtual assets and non-fungible tokens. In this section, the Financial Services Regulatory Authority (FSRA), the free zone’s principal regulator, terms NFTs as intellectual assets rather than “specified investments or financial instruments.” Likewise, it suggests that NFT marketplaces be run by both Virtual Asset Custodians (VACs) and Multilateral Trading Facilities (MTFs).
According to the document, transactions in NFTs may be subject to the Anti-Money Laundering (AML) and Sanctions Rules of the ADGM. However, at this point, FSRA is not recommending a formal regulatory framework for NFTs, as the document specifies. Thus, the consultation document is accessible for comments until May 20. Participants are urged to weigh in on some key issues, including “The type of NFTs expected to be traded on MTFs?” and “How should third-party NFT registries be integrated?”.
Abu Dhabi Global Market (ADGM) is one of three major free economic zones in the United Arab Emirates that host Virtual Asset Service providers (VASPs). It was also the first to re-establish its regulatory framework in 2018. However, another of the UAE’s free zones, the Dubai Multi Commodities Centre (DMCC), made it to the news last week by handing FTX and Binance exchanges its newly legislated crypto license.