Abu Dhabi, the capital of the United Arab Emirates, appears set to roll out trading in virtual assets soon as it has released a “consultation paper” that suggests guidelines for such a trade. The proposals are a step towards bringing the digital assets, including the non-fungible tokens (NFTs), under the regulatory framework, financial experts say. The emirate’s financial hub and free zone, Abu Dhabi Global Market, released the paper on March 21. The document has more than a page dedicated to virtual assets and NFTs.
The paper proposes that companies with a licence from the free zone’s financial regulator be allowed to facilitate NFT trading. In it, the free zone’s chief regulator, the Financial Services Regulatory Authority (FSRA), describes NFTs as intellectual property. It also suggests that NFT marketplaces be run by multilateral trading facilities (MTFs) and “virtual asset custodians”. The paper says that transactions in NFTs would require the parties involved to comply with the anti-money laundering and sanctions rules.
However, the consultation paper makes it clear that FSRA is not proposing a formal regulatory framework for NFTs at this point.
Authorities have asked stakeholders to give their thoughts on what sorts of NFTs should be allowed to trade on MTFs, as well as the best approaches to incorporate third-party NFT registries, until May 20.
Abu Dhabi Global Market is one of the three major economic zones operating in the UAE that host virtual asset service providers. It was the first to release a regulatory framework for virtual assets in 2018. Last week, another economic zone of the emirate, the Dubai Multi Commodities Centre, granted a crypto licence to FTX and Binance exchanges.
Earlier this month, the UAE adopted its first law to regulate cryptocurrencies and digital assets, including the NFTs. Under the new law, the country will establish a Dubai Virtual Assets Regulatory Authority (VARA), which would regulate these assets.
Binance has been working to offer its services in West Asia for some time. Recently, it also got a crypto service provider licence in another Gulf market, Bahrain.