The Abu Dhabi Global Market (the "ADGM") is a financial free zone and international financial hub situated in the capital of the United Arab Emirates (the "UAE"), Abu Dhabi.

This free zone has been diligently enhancing its regulatory framework for digital assets and distributed ledger technology ("DLT"), aiming to establish a comprehensive legal and regulatory structure for enterprises engaged in blockchain and DLTs. These regulations encompass issuance and trading of digital assets, Initial Coin Offerings or ICOs, and various related activities.

In a recent development, the ADGM made a significant step forward in improving the regulatory framework for digital assets, whereby its Registration Authority has officially introduced the DLT Foundations Regulations 2023 (hereinafter referred to as "Regulations"). This progress marks a noteworthy achievement, not only within the region but also on a global level.

Comprehensive Framework for the Blockchain Industry

The Regulations introduces a comprehensive regulatory framework designed to cater to the unique needs of DLT Foundations and Decentralized Autonomous Organizations ("DAO"s).

Their key focus is to set a global benchmark, being the first of its kind in the world, which is intended to be adaptable for blockchain foundations, web3 entities, DAOs, and traditional foundations looking to enhance their operations through DLT. Commenting on the launch of the framework, His Excellency Ahmed Jasim Al Zaabi, Chairman of ADGM, expressed, "The new regime serves as a driving force for positive change in the digital assets sector. By transforming the blockchain and Web3 landscape, we are moving towards a future characterised by setting global benchmarks with enhanced transparency and efficiency."

Salient Features of the DLT Foundations Regulations

The Regulations define a DLT Foundation as "a legal entity with separate legal personality established to use, deploy, develop, facilitate or support DLT or to issue Tokens" and outlines the list of information and documentation to be provided as part of the registration application, which includes:

  • a written Charter signed by all of the Founders;
  • a copy of the white paper, tokenomics paper and hyperlink to the DLT framework (if developed);
  • a declaration of compliance signed by the applicant affirming that: (i) all requirements of the Regulations relating to registration have been fulfilled; (ii) the Charter is compliant with the Regulations; and (iii) no Financial Services Permission is required in relation to the intended activities of the DLT Foundation;
  • an application for any licence required by the Commercial Licensing Regulations 2015;
  • the name of each of the Councilors, Founders, Beneficiaries, Beneficial Owners and Guardians (if any); the accounting reference date; and the name and address of the appointed auditor together with evidence of its appointment;
  • payment of the initial registration fees specified in the DLT Foundations Regulations (Fees) Rules 2023.

Initial Application Fees

Name Reservation

USD 200

Application for registration of a DLT Foundation

USD 500

Issuance of commercial licence

USD 8,000

Data Protection fee

USD 300

Furthermore, the DLT Foundation must at all times have a registered office in the ADGM as well as a company service provider subject to exemptions listed in the Regulations.

Additionally, a DLT Foundation is required to have initial assets with the minimum initial asset value, which constitutes USD 50,000 and has to be paid in fiat currency and cannot be contributed in any other form, including tokens.

In conclusion, the unveiling of the DLT Foundations Regulations 2023 by the ADGM represents a monumental step forward in the realm of digital asset regulation. This regulatory framework not only elevates the standards within the region, but also sets a global benchmark as the world's first of its kind.

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