The Financial Services Authority (FSRA), the regulatory arm of Abu Dhabi Global Market (ADGM) located in Abu Dhabi, has announced amendments to its digital asset regulatory framework. These changes are effective immediately, according to a press release from the FSRA.

The amendments come after extensive industry engagement and feedback on Consultation Paper No. 11 of 2024. They revise the acceptance of virtual assets and introduce a specific product intervention power related to these assets. Additionally, the FSRA has reiterated that privacy tokens and algorithmic stablecoins are prohibited within ADGM.

A key component of the amended regulation is the new definition of a Virtual Asset. It clarifies that a Virtual Asset is neither issued nor guaranteed by any government’s central bank and is defined solely by agreements within the user community. This differentiates it from Fiat Currency and E-money, and it is also not classified as a specified investment, fiat-referenced token, or spot commodity. For instance, an accepted virtual asset now must meet the requirements set by the regulator under section 5A(1)(b)(I), a change from the previous definition.

The amendments also allow banks to carry out virtual asset custody, expanding the potential for investments that Venture Capital Funds can pursue. Emmanuel Givanakis, Chief Executive Officer of ADGM’s FSRA, stated that these changes are significant for the evolution of the regulator’s framework, resulting from extensive consultations with industry stakeholders.

He emphasized the importance of providing regulatory certainty for industry participants while addressing the evolving risks associated with the digital asset ecosystem. Givanakis expressed confidence that these updates position ADGM as a leading jurisdiction for digital asset-related activities and demonstrate a commitment to fostering responsible innovation in financial services.

ADGM was among the first global regulators to introduce a virtual asset framework in 2018, and this recent amendment stems from feedback gathered in a consultation paper released in December 2024.