Abu Dhabi Advances Fiat-Referenced Token Regulation with New Framework

• FSRA’s latest proposals seek to regulate Fiat-Referenced Tokens (FRTs) to improve stability.
• FSRA will assess feedback submitted by the public until October 3 before making a final decision.

The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) has issued Consultation Paper No. 7 of 2024, which outlines ideas to improve its regulatory framework to support the issuance of Fiat-Referenced Tokens  (FRTs). This is an important milestone as the FSRA seeks to enhance its approach to digital assets.

New Regulatory Framework for Fiat-Referenced Tokens

FRTs, a kind of stablecoin, are backed by high-quality, liquid assets in the same currency, enabling quick liquidation with minimal market impact. They are designed for use as a payment method and share characteristics with Stored Value. The FSRA’s modified regulations will specifically handle FRTs, differentiating them from other digital assets and stored value under the Financial Services and Markets Regulations 2015 (FSMR).

The FSRA’s proposed methodology takes a risk-based approach to FRT issuance, in line with worldwide best practices and industry standards. This new regulatory category will provide specific business conduct and regulatory requirements to guarantee that FRT issuers operate safely.

The FSRA inquiries public feedback on these recommendations in order to create a strong regulatory framework for FRTs that reflects the rapidly evolving landscape of digital finance.

Tether’s new Dirham-pegged stablecoin launch aligns with Abu Dhabi’s FSRA’s recent recommendations for fiat-referenced tokens (FRTs). These policies stress reserve asset transparency and independent token administration, reflecting the UAE’s rapid crypto sector growth and dedication to regulatory clarity.

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