The proposed legal framework for distributed ledger technology (DLT), which focuses on disclosures, liquidation, and governance structures, evaluated by the Abu Dhabi Global Market’s Registration Authority (ADGM RA) is seeking comments from experts in the industry. The ADGM is an international financial hub in UAE which has a special licensing system for companies that offer services related to virtual assets that are governed by its financial regulator.
Primary recommendations made by the authorities for the new system focus on the foundational design of the DLT governance and control, tokens, token-holder voting, reporting and disclosures, beneficiaries, profit distribution, supervision, liquidation or voluntary strike-off, and bankruptcy. The authority is presently looking for opinions and feedback from the general public.
The proposal explicitly advocated for the development of a “standalone DLT foundations framework” rather than changing the current foundation’s regime for ADGM. According to their announcement, “The deadline for providing comments on the proposed framework is Friday, 12 May 2023. After receiving your comments, we shall consider whether any modifications are required to the proposals, and the ADGM Board of Directors (Board) will then proceed to enact the proposal in their final form.“
In order to acknowledge the legal standing of token holders, the proposal claimed that “Decentralised governance is expressly provided for with token-holders having the right to vote on certain matters, unless expressly stated otherwise in the Charter.” Additionally, It was proposed that the beginning asset value for DLT Foundations be at least USD 25,000.
Transparency, equity, and the production of audited yearly accounts were all emphasised in the plan. Despite the absence of any proposed particular marketing responsibilities, the Registrar will have the authority to issue interim restriction orders against marketing based on public policy considerations.
In the most recent framework proposal, ADGM RA acknowledged the general applicability of foundation structures for DLT initiatives. In reality, it also emphasised how the authority was in line with the ADGM’s objective to encourage and promote advances connected to crypto and DeFi.
Abu Dhabi launched a $2 billion effort to boost Web3 projects in February. As part of the Hub71+ Digital Assets ecosystem effort, companies will have access to a variety of programmes and possible business, governmental, and financial partners. Adding to it, Dubai adopted a crypto legal framework earlier this year.
The UAE announced federal licensing rules for virtual asset service companies wishing to operate in the nation last week. Through these actions, the country is looking forward to being a major global crypto hub and this framework makes one step of the many ahead.