Abu Dhabi publishes a consultation paper with NFT trading recommendations

On Monday, the emirate’s free zone, Abu Dhabi Global Market (ADGM), released a consultation document entitled “Proposals for enhancements to capital markets and virtual assets in ADGM.” The publication includes proposed guidelines for NFT trading, among other digital asset classes. Companies holding a license from the free zone’s financial regulator would be permitted to facilitate NFT trading, according to the report.

The paper comprises a little over a page on virtual assets and non-traditional financial instruments, in addition to sections related to basic financial instruments. The Financial Services Regulatory Authority (FSRA), the free zone’s principal regulator, refers to NFTs as intellectual property rather than “specified investments or financial instruments” in this section. It also suggests that NFT marketplaces be run by multilateral trading facilities (MTFs) and virtual asset custodians (VACs).

Transactions in NFTs may be subject to the Anti-Money Laundering (AML) and Sanctions Rules of the ADGM, according to the paper. Before this, a report by the United States Treasury connected NFTs with high-value art money laundering activities. 

FSRA does not recommend NFT regulation

As stated in the document, FSRA is not recommending a formal regulatory framework for NFTs at this time. The consultation paper is accessible for feedback until May 20 and invites participants to voice in on a number of key issues, including “What types of NFTs should be permitted to trade upon MTFs?” and “How would it be best to integrate third-party NFT registries?”

Notably, Dubai recently launched a new crypto regulatory framework along with establishing a crypto regulatory body.

ADGM is one of three main free economic zones in the United Arab Emirates that house virtual asset service providers (VASPs), and it was the first to re-establish its regulatory framework in 2018. However, another of the UAE’s free zones, the Dubai Multi Commodities Center (DMCC), made news last week by handing FTX and Binance exchanges its newly legislated crypto licenses.