Abu Dhabi Proposes Regulatory Framework for Fiat Referenced Tokens
- Abu Dhabi is advancing the regulation of fiat-referenced tokens (FRTs) with a new framework.
- Public feedback for the proposal is invited until October 3 after which, FSRA will finalize.
Abu Dhabi is taking significant steps towards regulating fiat-referenced tokens (FRTs), a specific type of stablecoin. The Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM) introduced a proposed framework on August 20. It aimed at overseeing the issuance and operation of FRTs.
FRTs are digital assets backed by high-quality, liquid reserves in the same currency as the token. These tokens are designed to be used as a means of payment, offering stability and minimal adverse price impact upon liquidation. Also, the FSRAs proposal outlines several key requirements for FRT issuers. It outlines that the value of the assets must be equal to the total amount of FRTs that are in circulation by the end of each day.
The regulatory framework also proposes that if an issuer manages multiple FRTs, they must maintain separate pools of reserve assets for each token. Also, it has to ensure that each pool is independently managed. This is done to safeguard the integrity and stability of each FRT, preventing potential risks with the mingling of assets.
Moreover, the FSRA has invited public feedback on this proposal, with a deadline set for October 3, 2024. Once the feedback is collected and analyzed, the FSRA will consider any necessary modifications to the proposed framework before finalizing.
UAE Strengthens Crypto Regulations, Enhancing Its Position
The UAE is emerging as a crypto hub with its investor-friendly regulations. QCP Capital received preliminary approval from ADGM in May, becoming the first Singapore-based firm. In June, the Central Bank introduced a stablecoin licensing system to boost digital transactions and the digital economy.
In addition to this framework, the FSRA is reviewing existing regulated activities to identify any necessary amendments for activities involving FRTs.
This regulatory move by Abu Dhabi aligns with the broader trend in the UAE of fostering a crypto-friendly environment, positioning the country as a potential global hub for digital assets.
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Read more: https://thenewscrypto.com/abu-dhabi-proposes-regulatory-framework-for-fiat-referenced-tokens/
Text source: TheNewsCrypto – Blockchain & Cryptocurrency News M
