Regulatory overview
- Scope
- Abu Dhabi
- Authorities
- Business environment
- Latest regulatory change
ADGM’s financial framework provides distinct routes for virtual assets, digital securities and fiat-referenced tokens. The FSRA authorises financial services within that jurisdiction, which must not be extended to the whole of Abu Dhabi. DLT foundations register with the Registration Authority and cannot themselves undertake activities requiring Financial Services Permission.
In Abu Dhabi, where a project is established changes its regulatory analysis. Abu Dhabi Global Market, or ADGM, is a financial jurisdiction with its own rules within the emirate. A business issuing a digital security, holding assets in custody or establishing a protocol foundation first needs to identify its actual functions and whether the activity falls within ADGM.
This guide separates registration of a legal structure from permission to provide financial services. It also explains why using currency-referenced tokens or staking client assets requires additional checks. The starting point is to connect the entity, asset, service and territory before choosing a corporate structure or designing the platform.
What ADGM regulates and where its jurisdiction ends
Abu Dhabi Global Market, or ADGM, has a digital assets framework distinguishing virtual assets, digital securities, Fiat-Referenced Tokens, derivatives and funds. Classification determines the rules governing the product and services. A token with the characteristics of a security is treated as such, even if it uses the same technology as a virtual asset in another category.
ADGM's jurisdiction must be distinguished from the rest of Abu Dhabi. Authorisation from its Financial Services Regulatory Authority, or FSRA, does not alone permit every activity in the UAE or access to clients in other countries. Territorial analysis must identify where the entity is established, where services originate and which markets it receives or solicits business from.
How FSRA supervision differs from entity registration
The FSRA authorises and supervises financial services within ADGM. The Registration Authority handles entity incorporation and registration, including DLT foundations. These are distinct functions. Corporate registration does not establish that an entity may hold client assets, operate a market or perform another regulated service.
Outside that perimeter, federal and Central Bank responsibilities must be assessed, including the payment token framework. ADGM's separate FRT regime does not remove the need to analyse an offering or use outside the financial free zone. A local authorisation must not be extended to the whole UAE without examining the product and territory.
How an application becomes an operating permission
The FSRA process includes initial engagement, application, documentary assessment and potential in-principle approval subject to conditions. The final Financial Services Permission is issued after the relevant conditions have been satisfied. That initial approval, commercial licensing and the final permitted financial services scope must be distinguished.
The RegLab guidance describes testing under a limited permission, normally for up to two years. Moving to full authorisation depends on meeting the relevant criteria and does not occur automatically when testing ends. Before relying on this route, a project must confirm the model's eligibility, participation conditions and availability of the process.
As evidence of access, the FSRA announced an M2 permission in August 2023 for operating a multilateral trading facility and providing custody. This records an actual authorisation, rather than verifying its present status. Before contracting, consult the FSRA register and check the entity, status and activities; corporate registration has a different scope.
How securities, foundations and currency tokens differ
Digital securities follow the applicable securities framework. Tokenization must respect requirements for the issuer, offering and intermediaries according to the transaction. Economic rights, transfer powers and enforcement mechanisms must arise from legal documents consistent with the technology records. Issuing a token alone does not establish real estate ownership or replace property registration formalities.
DLT foundations provide legal personality and governance for certain blockchain structures. ADGM's official information states that they may issue utility tokens, but cannot perform commercial or financial activities requiring Financial Services Permission. Subsidiaries may carry out regulated activities if they obtain the necessary licences. A foundation must not be presented as a fund, custody or securities issuance licence.
Amendments to the Fiat-Referenced Token framework applying from 1 January 2026 require separate consideration. The FSRA maintains an Accepted FRT list for use in regulated activities under COBS 17.2A.1. Regulatory acceptance does not replace assessment of the issuer and reserves or eliminate counterparty risk.
What controls apply to holding and using client assets
Assessment of an operator must address governance, custody, technology, financial crime prevention and market surveillance controls according to its activities. The project must define key control, asset segregation and recovery, external providers' powers and failure response. Smart contracts do not by themselves allocate legal responsibility for a loss or incorrect instruction.
The staking framework announced by the FSRA on 29 April 2026 identifies categories of authorised entities and requirements for using clients' virtual assets. It includes conditions for rewards, terms, disclosures and client reporting. The permission and rules for the particular operation must be checked. The announcement does not mean every authorised entity may offer every form of staking or that returns are guaranteed.
What to prepare before establishing a project in ADGM
Prepare a map of participating entities and their functions: foundation, issuer, operator and custodian where relevant. Identify who controls keys, which assets are accepted and where clients are located. This allows the required Financial Services Permission to be assessed and highlights activities requiring separate federal or destination-country analysis.
For a foundation, specify token rights and any subsidiary’s tasks. For staking or currency-referenced tokens, add the conditions governing use, return and asset risk. Product eligibility, marketing beyond ADGM and individual permission conditions need to be resolved before accepting funds; incorporating an entity does not settle those questions.
To understand how this framework applies to your project, discuss your case with our team.
Key takeaways
- ADGM is a defined financial jurisdiction, not a framework automatically applicable across Abu Dhabi.
- In-principle approval must be completed and its conditions satisfied before Financial Services Permission is issued.
- DLT foundations cannot perform activities requiring financial services permission.
- The FSRA requires Accepted FRTs for the relevant regulated activities and provides specific staking rules.
Regulatory milestones
Updated FRT framework applies
FSRA’s announced enhancements for Fiat-Referenced Tokens and their use in regulated activities begin to apply.
Virtual asset staking framework
The FSRA announces the final framework, including eligible entity categories and conditions for rewards, disclosures and client reporting.
Frequently asked questions
Not automatically. ADGM has its own legal perimeter. The permitted services, activity location and rules for clients or markets outside that jurisdiction must be checked.
The foundation cannot perform activities requiring Financial Services Permission. A model requiring regulated custody must involve an appropriately authorised entity. Establishing a subsidiary does not remove its obligation to obtain the relevant licence.
ADGM’s DLT foundations guidance contemplates utility tokens. These must be distinguished from securities or services requiring financial permission. The token’s actual function and the foundation’s activities determine the analysis; describing it as a utility token does not permit adding custody or investment management.
No. The framework for fiat-referenced tokens governs which assets may be used in authorised activities. Acceptance does not guarantee reserves, liquidity or recovery against an issuer in every circumstance. Client contracts should explain who bears those risks and how return requests are handled.
The April 2026 staking announcement limits rewards to accepted virtual assets and accepted fiat-referenced tokens. Operators must also check their permission category and client disclosures. Acceptance of a reward asset does not guarantee its future value.
