Abu Dhabi’s financial regulator has opened a public consultation on a proposed regulatory framework to guide the supervision of fiat-referenced tokens (FRTs), a category of stablecoins.
The regulator noted that after reviewing definitions from other jurisdictions it is proposing that an FRT should be defined as a digital asset that is transferred and stored electronically using distributed ledger technology.
The FSRA proposed that the market value of reserve assets must be at least equal to the par value of all outstanding FRTs by the end of each business day. Additionally, FRTs should be valued daily on a mark-to-market basis.
The regulator also proposed that issuers of multiple FRTs operate and maintain separate pools of reserve assets for each token and manage these pools independently.
Alongside establishing a regulatory framework for FRT issuance, the FSRA noted that it reviewed its existing suite of regulated activities to determine if amendments are needed for activities involving FRTs.
The FSRA has set an October 3, 2024, deadline for feedback on the proposal. Following the review of comments, the FSRA will determine if modifications to the regulatory framework are necessary. The ADGM board and FSRA will then finalize and implement the framework.
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