Regulatory Alerts2024-01-01
Consultation Paper No. 7 of 2024 - Proposed Regulatory Framework for the Issuance of Fiat-Referenced Tokens
The Financial Services Regulatory Authority of the Abu Dhabi Global Market proposes a distinct regulatory framework for the issuance of fiat-referenced tokens, treating them as a new regulated activity separate from stored value. The proposal mandates that issuers fully back tokens with high-quality liquid reserve assets, segregate these funds, and provide holders with a right to redeem tokens at par value within two business days. Additionally, the framework prohibits algorithmic stablecoins and allows issuers to distribute income from reserve assets to holders, subject to strict prudential safeguards and disclosure requirements.
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