November 4, 2023

Abu Dhabi’s ADGM Issues New Regulations To Govern Web3 Organizations



The Registration Authority of the Abu Dhabi Global Market (ADGM) has introduced new regulations that cover Web3 organizations comprehensively.

The ADGM said that its regulatory framework is the first of its kind and is purpose-built for the international financial free zone.

The Distributed Ledger Technology (DLT) Foundations Regulations are designed to govern the functioning of blockchain foundations, Web3 entities, decentralized autonomous organizations (DAOs), and traditional foundations expanding into DLT.

Blockchain foundations provide financial and other support to a blockchain without direct involvement.

The regulations allow the creation of a “DLT Foundation” by submitting a signed charter that includes information about the foundation’s initial assets, governance, and token issuance (if any). The organization’s white paper, tokenomics paper, and a link to a technical document called a DLT Framework should also be provided.

A foundation must follow certain regulations to operate within the ADGM. These regulations include disclosing the names of key figures, which will not be made public, and having a name that ends with “DLT Foundation.”
The foundation must also have a council of two to sixteen members for managerial and administrative purposes.

However, it is not allowed to carry out activities licensable by the ADGM Financial Services Regulatory Authority. The token holders of the foundation will be treated as beneficiaries.

The regulations were issued on November 1 but were dated October 2. The initial registration application fees will amount to $50,000. English law is applicable within the ADGM, which was established in 2015.

Regulations on cryptocurrency were introduced in 2018. The new regulations aim to enhance ADGM’s reputation in the blockchain and digital assets.

In this regard, DGM chairman Ahmed Jasim Al Zaabi said in an emailed statement: “By transforming the blockchain and Web3 landscape, we are moving towards a future characterized by setting global benchmarks with enhanced transparency and efficiency.”

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