The Abu Dhabi Global Market (ADGM) is one of the regulatory authorities in the UAE and has the most comprehensive payments and virtual assets regimes in the UAE market. ADGM licenses activities include (i) multilateral trading facility for virtual assets (i.e. a secondary market trading platform), (ii) brokerage, custodianship and issuance platforms for virtual assets, (iii) execution of payment transactions and (iv) issuing payment instruments.
The alternative is the ‘federal’ path in which one would have to obtain licenses from the UAE Central Bank (for payments), the UAE Securities Authority (for digital securities) and the UAE Virtual Assets Regulatory Authority (VARA) (for decentralized tokens).
Whilst the VARA regime is promising, it has a number of draw-backs being (i) it is only a Dubai regulator and it is not possible to carry on activities regulated by it within the wider UAE, (ii) it does not authorize businesses carrying on activities that constitute financial services, i.e payments, digital securities issuance/trading etc. and (iii) the regime is in a very early stage with ongoing AML and conduct of business rules not being released yet so you would not know what you are signing up for by being licensed.
Instead, it is possible to be licensed in the ADGM and simply register – not license – with the VARA to promote the products and services to Dubai-based customers.
SNAPSHOT OF REGULATORY REGIMES
| Supervisor | Jurisdiction | Supervisory scope | License application period (estimated) |
| Federal Central Bank (CB) | All of UAE excluding financial free zones ie DIFC and ADGM | Monetary system Deposit-taking Lending Foreign exchange Insurance Payment systems Stable coins |
6-8 months |
| Federal Securities and Commodities Authority (SCA) | All of UAE excluding financial free zones ie DIFC and ADGM | Capital markets Fund management Foreign financial products |
6-8 months |
| Dubai Virtual Asset Regulatory Authority (VARA) | Dubai only excluding DIFC | Virtual assets business, marketing and promoting (excluding stable coins (CB) and digital securities (SCA)) | 3 months |
| ADGM Financial Services Regulatory Authority (FSRA) | ADGM only | All traditional financial sectors Payments systems Virtual assets (including utility tokens, decentralised tokens, stable coins and digital securities) |
4 months |
| DIFC Dubai Financial Services Authority (DFSA) | DIFC only | All traditional financial sectors Payments systems Virtual assets (digital securities only) |
4-6 months |
AUTHORISATION PROCESS – KEY STEPS (ADGM)
The following are the key steps for the authorization process:
- Initial meeting/s with Financial Services Regulatory Authority (FSRA) and ADGM – to discuss the proposed model and business plan.
- Submission of letter of intent – expressing interest in becoming incorporated and licensed in the ADGM (a simple one-page letter of a standard form).
- Preparation of the draft regulatory business plan (RBP) – RBP is the foundation document of your application which sets out all details around your suitability to conduct property investment crowdfunding in the UAE. It will require you to include information around (i) your company group, background, and key business lines/markets globally, (ii) your proposed business for the region and how this fits in with the scope of the license being sought, (iii) the profiles of key management both at the local level but also right up to the board of the group (and any management that will have material oversight of the ADGM entity), (iv) an outline of all control functions i.e. audit, compliance, AML, finances, legal, etc. and (v) financial projections for the ADGM entity.
- Receipt of initial feedback from the regulator on the draft RBP and finalization of application. This will take the form of written comments/suggestions on the documents. The applicant then finalizes the RBP and the rest of the application documents (i.e. the core authorization form, authorized personnel forms as well as any variation/endorsement requests (i.e. to provide products/services to Retail Clients and handle Client Assets).
- Receipt of feedback from the regulator on the application. Unless the RBP/application documents have been submitted with major omissions (which if we worked with you we would ensure they would not) these usually take the form of minor queries and/or requests for further information – they should not be material/deal breakers.
- Interviews of SEO/CFO/CMLRO – this will happen around four weeks after submission.
- In-Principle Approval – this is usually issued 8-10 weeks after submission. It will provide the license subject to the applicant fulfilling a finite list of requirements. These will generally be a number of standard conditions, namely (i) establishment of its corporate entity (ie company/branch) – this cannot be started until In-Principle Approval is received, (ii) opening of a bank account and deposit of the regulatory capital (again – this can’t be opened until IPA is received however it will not apply if we establish as a branch), (iii) securing office space in the ADGM and (iv) being ‘open for business. There will also be a number of virtual asset or payment specific conditions around the technology security of the platform, anti-money laundering controls and other items that we can advise on in due course.
- Issuing of final license – from initial submission of the application to the final license we would estimate approximately four months.
Written by David Woliner, Adv.
Head of Financial Regulation.