One of the two Financial Free Zones in the UAE is the ABU DHABI GLOBAL MARKET (ADGM). The Financial Services Regulatory Authority (FSRA), an independent risk-based regulator that awards licenses and controls the operations of all banking and financial institutions in ADGM, is at the core of the ADGM concept. The ADGM is a well-known and well recognized worldwide financial center that helps local, regional, and international organizations to obtain Crypto Exchange license and other Financial Licenses in Abu Dhabi (UAE).
ADGM is the world’s first jurisdiction to establish a complete and tailored regulatory framework for the regulation of spot virtual asset operations, including those carried out by multilateral trading facilities, brokers, custodians, asset managers, and other intermediaries.
The ADGM is a prominent jurisdiction in the world for virtual asset regulation. Its extensive structure enables market-leading virtual asset players to operate in a business-friendly environment. The regulatory framework handles a wide variety of issues, including market manipulation and financial crime, consumer protection, technological governance, custody, and exchange operations. A Crypto Asset exchange is a Multilateral Trading Facility that uses crypto assets, according to the FSRA.
In the UAE, there is currently no crypto legislation. The FSRA’s “Regulation of Crypto Asset Activities in ADGM” is the most comprehensive cryptocurrency guidance in the country. A corporation that conducts acts using crypto assets must meet the following standards, according to it:
- Only a limited number of crypto assets are permitted. Market capitalization, traceability, security, price volatility, and other characteristics are used to make decisions regarding certain crypto assets.
- You must keep “capital resources equivalent to 6 months’ operations expenditures” in fiat currency (12 months’ equivalent for crypto exchanges).
- Detecting and preventing fraud. KYC is a legal requirement.
- Risk management and transparency are required.
- Keeping finances and information safe through “code version control,” “update implementation,” “problem resolution,” and “frequent internal and third-party testing.”
The FSRA’s Virtual Asset framework was created with virtual assets in mind. A license for a Regulated Activity in connection to virtual assets allows you to engage in one or more virtual asset activities, such as:
- Operating a Multilateral Trading Facility (MTF) is the first step (MTF)
- Providing Custody
- Purchasing, selling, or exercising of any right (whether as principal or agent)
- Managing Assets belonging to another person
- Making arrangements for someone else (whether as principal or as an agent)
- Purchasing, selling, or providing asset custody
- Marketing
- Providing advice on the merits of purchasing or selling assets, as well as any rights afforded by such purchases or sales.
Steps to obtain a crypto exchange license in Abu Dhabi (UAE)
Due diligence and conversation with the FSRA, including an explanation of the proposed business model, demonstrations of plans to fulfill regulatory standards, and in-depth technical demos across all elements of planned virtual asset operations;
Following conversations with the FSRA and the FSRA having reasonable comfort that the applicant’s procedures, capabilities, and technologies are at a suitably advanced stage, the applicant must submit applicable paperwork and fees.
Granting of in-principle permission, which will be given once the FSRA has reviewed all required forms and accompanying documentation and determined that the applicant complies with all applicable laws and regulations;
Final approval is granted when all of the requirements set forth in the in-principle approval are satisfied to the satisfaction of the FSRA within the timeframe specified. While this is usually the last step before relevant activities can begin, in the case of virtual assets, it is conditional on the FSRA being further satisfied in relation to the applicant’s operational testing and capabilities, as well as the completion of a third-party verification of the applicant’s systems, if applicable; and operational launch testing and third-party verification of the proposed virtual assets to the satisfaction of the FSRA.
What are the requirements for a crypto exchange license?
The capital requirement is equivalent to up to 6 months’ operational expenditures, plus an extra buffer of up to another 6 months’ operational expenses, unless the Regulator instructs otherwise.
Note that depending on the size, breadth, complexity, and nature of the proposed firm’s activities and operations, FSRA may impose extra capital requirements during the application process.
Appointments for an authorized firm in ADGM:
- Directors (at least 2, preferably 3-4) – can be outsourced (NEDs).
- Senior Executive Officer (SEO) – In-house, UAE resident (can be a Director).
- Risk Officer (RO) – can be outsourced.
- Finance Officer (FO) – can be outsourced (can also be an Executive Director/Senior Manager).
- Money Laundering Reporting Officer (MLRO) – can be outsourced, UAE resident (can be a CO).
- Compliance Officer (CO) – can be outsourced, UAE resident (can be an MLRO).
If you’re looking for a cryptocurrency license in the UAE, you’ve come to the right place. Get your own crypto license by contacting us today. With our help, you’ll be able to get up and running quickly. Write to us in the CRM form at the bottom of the page, our specialists will answer you online, or contact our specialists for detailed advice.
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