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The Financial Services Regulatory Authority (FSRA) issued a regulatory framework for the issuance of fiat-referenced tokens (FRTs) in ADGM, according to a press release (pdf). The new regulations (pdf) set out a definition for FRTs, allowing its issuance and its use as a method of payment within ADGM.
Uh, Enterprise, what are FRTs? FRTs are a type of stablecoin whose value is pegged to a traditional fiat currency.
The regulations set out requirements for their issuance, including clarifying constituents of reserve assets, requiring periodic attestation and stress testing, and requirements for disclosures and whitepapers on risks and holder rights. The new rules also clarify capital adequacy requirements and restrictions, and ensure holders can redeem tokens at par value within specific timeframes by setting redemption rights.
REMEMBER- The FSRA issued a consultation paper in August, proposing new rules to allow the issuance of fiat-referenced tokens. The Dubai Financial Services Authority also eased regulations around unrecognized crypto tokens and stablecoins, while the Central Bank of the UAE’s board greenlit the introduction of a licensing and regulatory system for stable cryptocurrencies.
PLUS- We have an AED-pegged stablecoin on the way: The Central Bank of the UAE (CBUAE) gave in-principle approval to AED Stablecoin’s AE Coin in October, putting it on track to become the country’s first regulated stablecoin if it earns final approval. ADX-listed crypto miner Phoenix Group and cryptocurrency giant Tether also plan to launch an AED-pegged stablecoin fully backed by liquid UAE-based reserves and accessible globally, pending regulatory review and approval.
