ADGM has reviewed its digital assets rulebook — introducing new enforcement powers that allow the regulator to suspend financial services licenses for up to 12 months and extending misconduct rules to cover fiat-referenced tokens, according to its amendments (pdf). Fiat-referenced tokens now fall under the rules applied to virtual assets and spot commodities.

Token + misconduct contraventions: If the regulator detects contraventions in fiat-referenced activity, it can ban the issuance, sale, transfer, and custody activities relating to the specific token through a written notice that can be referred to an appeals panel.

The rules also include changes to financial services permissions and approvals — which the regulator can now vary or suspend for up to 12 months if necessary, including while it conducts an investigation into an authorized person it suspects of misconduct. Suspensions can be appealed. The regulator can also halt the offering of a unit in a fund if contravening regulations and withdraw the fund from the register.

Fees for fiat-referenced tokens: ADGM also clarified in an accompanying fees rulebook (pdf) that firms conducting fiat-referenced token activities are subject to:

  • An annual USD 10k supervision fee and an initial USD 10k application fee to the regulator;
  • For all related regulated activities, firms must also pay a USD 20k application fee and USD 15k supervision fee;
  • If the activity involves a multilateral trading facility, an additional USD 125k application fee and USD 60k supervision fee applies;
  • No double charge: Firms conducting both virtual asset activities and fiat-referenced token activities will only pay for virtual asset activities.

REMEMBER- The ADGM recently proposed a regulatory framework to govern fiat-backed tokens (or stablecoins pegged to fiat currencies) to regulate intermediation and custodians, after earlier introducing a framework for FRT issuance, defining the tokens and their use as payment instruments.

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