The emirate’s special economic zone might grant nonfungible tokens trading rights to regulated exchanges.
On Monday, the emirate’s free zone, Abu Dhabi Global Market (ADGM), released a consultation paper titled “Proposals for upgrades to capital markets and virtual assets in ADGM.” The publication includes proposed guidelines for nonfungible token (NFT) trading, among other asset types. Companies holding a licence from the free zone’s financial regulator would be permitted to facilitate NFT trading, according to the report.
The text comprises a little more than a page on virtual assets and non-traditional financial instruments, in addition to sections dedicated to standard financial products. The Financial Services Regulatory Authority (FSRA), the free zone’s principal regulator, refers to NFTs as intellectual property rather than “defined investments or financial instruments” in this section. It also suggests that NFT marketplaces be run by multilateral trading facilities (MTFs) and virtual asset custodians (VACs).
Transactions in NFTs may be subject to the Anti-Money Laundering (AML) and Sanctions Rules of the ADGM, according to the paper.
As stated in the document, FSRA is not proposing a formal regulatory framework for NFTs at this time. The consultation document is accessible for feedback until May 20 and invites stakeholders to weigh in on a number of key issues, including “What sorts of NFTs should be permitted to trade on MTFs?” and “How should third-party NFT registries be integrated?”
ADGM is one of three major free economic zones in the United Arab Emirates that house virtual asset service providers (VASPs), and it was the first to re-establish its regulatory framework in 2018. Another of the UAE’s free zones, the Dubai Multi Commodities Centre (DMCC), made news last week when it granted FTX and Binance exchanges their newly legislated crypto licence.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.
