ADGM's Financial Services Regulatory Authority (“FSRA”) regulatory update Q2 2024

Regulatory horizon scanning and enforcement

• The FSRA issued several circulars during the reporting period:
  
  
  • On April 29, 2024, FSRA published an SEO Letter on Strategic Review on Targeted Financial Sanctions (“TFS”) case studies. The Executive Office for Control and Non-Proliferation (“EOCN”) has issued a strategic review on TFS case studies for 2019-2023. All relevant persons are required to consult the latest TFS review strategic report. To access TFS case studies, please click the link.
    
    
  • On June 10, 2024, ADGM and the Bermuda Monetary Authority signed a Digital Assets Memorandum of Understanding (“MoU”). This MoU creates a framework to support the establishment of digital assets entities across their jurisdictions with effective supervision. This framework encompasses regulatory and supervisory cooperation, investigative assistance, and capacity enhancement initiatives.
    
    
  • On June 13, 2024, ADGM Academy and Ethara signed an MoU to develop next-gen Emirati Talent. This will enable Ethara (the region's leading live event management company and venue operator) to work towards establishing an educational hub that will provide training programmes, upskilling opportunities, and courses for developing competencies that meet the changing market demands.

• Consultation papers

  • On May 20, 2024, the ADGM published a consultation paper on Enhancements to its Sustainable Finance Regulatory Framework. ADGM is requesting input on its proposed guidance outlining the FSRA’s expectations for ESG-labelled investment vehicles and appropriate next steps in the development of regulatory expectations connected to climate-related risk management and transition planning. This consultation paper should be of particular interest to fund managers and asset managers, and all companies subject to the Companies Regulations 2020. Feedback for comments is open until the July 19, 2024. To view the consultation paper, please click here.
    
    
  • On May 31, 2024, the ADGM published a consultation paper on the “Comprehensive Revamp of its Real Property Regulations”. The ADGM invites all individuals and organisations present in the ADGM to give feedback on the proposed amendments to ADGM’s Real Property Regulations 2015, the paper also includes new rules and regulations for off-plan development and registration of off-plan and real property professionals. Feedback for comments closed on the June 19, 2024. To view the consultation paper, please click here. 
    
    
  • On June 14, 2024, The Registration Authority of ADGM published a consultation paper on “Single Family Offices and Company Charges” (“the Paper”) for all single family offices. The Paper aims to seek public feedback and comments on the Companies Regulations 2020, the Commercial Licensing Regulations (Controlled Activities) Rules 2022, and the Commercial Licensing Regulations (Conditions of Licence and Branch Registration) Rules 2023. Feedback is open for comments until the July 14, 2024. To view the paper, please click here.

• Enforcement actions

  • On May 21, 2024, the Financial Services Regulatory Authority (“FSRA”) fined Sarwa Digital Wealth (Capital) Limited (“Sarwa”) USD 122,500 for making an Offer of Securities to potential investors in ADGM without an Approved Prospectus. Resulting in 144 investors subscribed an amount of USD 2.1 million without sufficient information. The FSRA imposed a fine and Sarwa to undertake an independent review of its governance arrangement. 
    Sarwa reversed all committed subscriptions promptly upon being informed of the FSRA’s concerns. The FSRA’s investigation was conducted in close coordination with the DFSA evidence and findings
    
    

• Matters of clarification

  • On June 5, 2024, the FSRA issued an alert over misleading claims made by Manra Capital (“Manra”), an unlicensed Firm about the Tharwa Fund “the Fund”, a purported fixed-return real estate fund. Manra falsely claimed in a proposed marketing event brochure that the Fund was overseen and supervised by the ADGM FSRA. The FSRA clarified Manra has never been licensed by the FSRA or ADGM. Manra has not been incorporated in ADGM or ever been established as a Collective Investment Fund in the ADGM.
    

• News/updates

  • On April 16, 2024, ADGM announced that Triton Liquid, a digital assets hedge fund, had established global headquarters in Abu Dhabi, receiving  an In-Principal Approval (“IPA”) for an FSP, from the FSRA. The launch will provide a best-in-class, tailored platform for Middle Eastern investors seeking to capitalise on the growth of blockchain technology and cryptocurrency adoption.
    
    
  • On April 17, 2024, ADGM announced Varys Capital Ventures (CEIC) Limited is set to launch in the ADGM. Varys Capital (“Varys”) partnered FundRock Investment Management Services (ME) Ltd (“FundRock”) a licensed fund management company, to manage a feeder fund, Varys Capital Ventures (CEIC) Limited in the ADGM. The feeder fund will invest into a Master Fund (the “Fund”) an equity-based venture fund focused on blockchain innovation, Web3 and Infrastructure. Varys targeting investments from small family offices, high-net worth individuals, and institutes.
    
    
  • On April 18, 2024, ADGM announced that venture capital fund manager Token Bay Capital (“Token Bay”) was granted an In-Principle Approval (“IPA”) to invest in tokens with a first of its kind license in ADGM. Subject to final approval for the grant of the Financial Services Permission (“FSP”), Token Bay brings niche capabilities to manage both token and equity investments in early-stage crypto start-ups under the FSRA's Venture Capital Fund Manager (“VCFM”) framework. 
    
  • On April 18, 2024, ADGM announced it won “Most Trusted Financial Centre Brand, Middle East“ at Global Brand Awards 2024. The Global Brands Magazine (“GBM”) conducted a thorough evaluation, assessing numerous criteria such as customer trust and satisfaction, innovation and technology, regulatory compliance, and brand value, among others. ADGM showcased outstanding performance in this assessment, underscoring its excellence and meriting commendation.
    
    
  • On April 23, 2024, ADGM announced that Peninsula has been granted an In Principle Approval (“IPA”) from the FSRA. Peninsula, a real estate investment company, will become the first internally managed Real Estate Investment Trust (“REIT”) to establish in the ADGM.
    
    
  • On April 24, 2024, ADGM and Hacken Forge Partnership signed a Memorandum of Understanding (“MoU”) to collaboratively set new benchmarks for blockchain security and compliance. This strategic partnership reflects a unique synergy between a regulatory body and a security auditor aiming to establish a world-leading at establishing a world-leading security assessment standard in the blockchain industry. 
    
    Highlights of the MoU include collaboration in:
    
    
    1. Development of security and compliance standards;
    2. Advanced DLT Foundation monitoring arrangements;
    3. Development of AI-enhanced monitoring solutions.
       
       
  • On May 3, 2024, Klumi Ventures (“Klumi”) proudly announced its achievement as the UAEs' pioneering Web3 venture capital firm regulated by the FSRA. Klumi is permitted to invest in tokens as well as equity investments in early stage Web3 startups. Klumi is launching a $100 Million fund tailored for emerging technologies and decentralised sectors and has future plans to launch a $15 Million Qualified Investors Fund slated for pre-seed and seed investments for early-stage Web3 startups.
    
    
  • On May 13, 2024, Blockdaemon, a leading institutional-grade blockchain infrastructure company is expanding to operate and provide Web3 presence in the UAE by setting up office in the ADGM. 
    
    
  • On May 14, 2024, Liminal Custody Solutions (“Liminal”) secured an ADGM Financial Services Permission (“FSP”) License, reinforcing leadership in digital asset custody. This license is a significant milestone in Liminal's journey, solidifying its commitment to regulatory compliance and innovation within the expanding digital asset space. 
    
    
  • On May 17, 2024, ADGM announced that Venom Foundation, an ADGM-registered foundation, is no longer conducting any activities in ADGM having voluntarily cancelled its commercial licence in February 2024 and appointed a liquidator in March 2024 to wind down its operations.
    
    
  • On May 20, 2024, ADGM announced a record-breaking increase in asset under management of 211% from Q1 2023 to Q1 2024, managing 137 funds and including 107 assets and fund managers working from the ADGM. There was growth of 30% increase of operational entities with a significant increase in workforce too.
    
    
  • On May 23, 2024, ADGM announced Klickl was granted the Financial Services Permission (“FSP”) to enhance Web3.0 offerings globally for subject matter experts.
    
    
  • On May 23. 2024 the UAE-France investor Meetup was held at the ADGM which aimed at reinforcing investment ties between the two nations, forging strategic alliances, identifying new opportunities, and driving mutual economic growth. 
    
    
  • On May 29, 2024, ADGM successfully concluded a Series of Roadshows in the European Region (France and Switzerland) to promote ADGM as an International Financial Centre (“IFC”) to funds and wealthy clients looking to expand region. This resulted in over 100 bilateral discussions engaging in significant international financial market events. 
    
    
  • On June 7, 2024, ADGM announced that Paxos International Introduces the Lift Dollar (“USDL”) - the first stablecoin to offer holders daily yield in wallet under regulatory oversight of the FSRA. USDL will partner with international exchanges, wallets, and platforms to distribute it to individuals and institutes.
    
    
  • On June 13, 2024, ADGM announced, Abu Dhabi Finance Week (“ADFW”) on December 9-12, 2024. The theme ‘Welcome to the Capital of Capital’ will focus on financial, human, and technological aspects. The 2024 edition will host over 50 events within ADGM and is set to attract 18,000 participants on thematic days covering Abu Dhabi’s Falcon Economy, Asset Management, Tech, and Sustainability.