Abu Dhabi to Regulate Fiat-Backed Tokens, Seeks Public Feedback

Abu Dhabi's Financial Services Regulatory Authority (FSRA) plans to oversee fiat reference tokens (FRTs), a type of stablecoin, in response to growing stakeholder interest.

The FSRA has invited public feedback on its proposed regulatory framework, which includes operational restrictions and requirements for FRT issuers.

Key elements of the proposal include ensuring that the market value of reserve assets matches or exceeds the face value of all FRT in circulation at the end of each business day, with daily mark-to-market valuations. Issuers of multiple FRTs must maintain separate pools of reserve assets for each token.

FRTRA has set a public comment deadline of October 3, 2024, after which FSRA will finalize the regulatory framework. The proposal defines FRTs as digital assets managed through distributed ledger technology, with their value tied to a single fiat currency and redeemable on demand.

READ MORE:

Hong Kong Lawmaker Proposes Regulation for DAOs After Court Case

The FSRA is also reviewing existing regulated activities to determine appropriate amendments for FRT-related services, with further proposals to be set out in a separate consultation paper. The move reflects the UAE’s growing reputation as a favourable crypto destination, following recent approvals for digital asset activities and the new stablecoin licensing system.

Alexander Stefanov