Abu Dhabi Authorities Introduce Cryptocurrency Regulations in Special Economic Zone
The regulatory uncertainties that have surrounded the blockchain-based digital currency space for nearly a decade are gradually fading away, as various world governments are hard at work formulating laws for their cryptospace. In the latest development, Abu Dhabi’s international financial center has drafted new guidelines for cryptocurrency exchanges and virtual currency-powered businesses in the region.
Protecting Consumers and Curbing Money Laundering
Following a successful public consultation exercise by the Abu Dhabi Global Market (ADGM) Financial Services Regulatory Authority (FSRA) in May 2018, the Abu Dhabi authorities have now put in place a robust regulatory framework for its cryptospace.
According to a statement by the ADGM team, the regulatory framework for crypto-based companies operating in the financial free zone has been designed to include spot crypto services offered by exchanges, custodians and other intermediaries in the area.
At a time when the rate of cryptocurrency crimes is on an alarming increase, the authorities say the guidelines will eliminate a ‘ range of risks’ associated with virtual currencies including money laundering and other financial crimes while fostering consumer protection concurrently.
Crypto Exchanges Levied
The new regulations stipulate operators looking to establish a new exchange will be required to pay an initial authorization fee of $125,000 and an annual fee of $60,000; while crypto custodians like wallet firms will pay $20,000 initially and $15,000 yearly payment.
Additionally, the regulator has imposed a levy on daily trading on a sliding scale basis. For instance, exchanges that accrue an average transaction value less than $10 million, could face $15,000 monthly levy, while exchanges with an average daily value over $250 million would have to pay the FSRA a 0.0006 percent cut, a minimum of $150,000 per month.
According to the FSRA, the country capital’s international financial center and free zone, the introduction of regulations comes as an offshoot of public consultation with local and global respondents, which led to ‘several refinements’ before release.
The CEO of FSRA, Mr. Richard Teng said:
“We are encouraged by the significant global and regional interest from exchanges, custodians, intermediaries and other institutions to our crypto spot regulatory framework,” adding “Globally, responsible crypto asset players are seeking a regulatory regime upholding high standards that foster market confidence. By introducing a comprehensive and best-in-class regulatory framework, the FRSA is taking a leading role in instilling proper governance, oversight, and transparency over crypto asset players.”
The authorities have made it clear that crypto assets are commodities and as such, they fall under the purview of the FSRA.
Amenable Regulation for the Good of All
Slowly but steadily, the global digital currency ecosystem is getting regulated and more organized to curb the activities of criminals.
On June 21, 2018, BTCManager informed Cambodia had mandated all crypto-related businesses in the region to obtain relevant licenses from the Securities and Exchange Commission.