Financial regulator of Abu Dhabi published rules for the regulation of ICO campaigns

The Financial Services Authority of Abu Dhabi, the capital of the UAE, made public recommendations concerning virtual currencies and ICO. These instructions have been published to clarify the regulatory approach of the Abu Dhabi government for ICO and crypto currency both for the organizers and for users of digital currencies. After discussion, the Financial Services Authority (FSRA), the financial market regulator in Abu Dhabi, decided that the one-size-fits-all approach to virtual tokens, be it ICO tokens or digital currencies, or any other implementation of block-based solutions based on cryptographic tokens, is "inappropriate".

Regulation of ICO
"The ICO market is incredibly diverse in terms of quality, there are some ICOs that pose a high risk," said Christopher Kiew-Smith, chairman of the Fintech Strategy at FSRA. "Disclosure of information does not exist, there are no financial reports, this is a very high risk for those who are looking for income."

In accordance with the new guidelines, companies wishing to organize an ICO now need to contact the FSRA, where the body will determine whether to adjust the security token. If the FSRA determines that the token is out of the scope of the security definition, then such a proposal will be rejected.

The FSRA stressed that the ICO is "a new and potentially more cost-effective way of raising funds for companies and projects." In general, this decision shows a contrast in the approach to similar decisions of China and South Korea, which imposed a ban on holding the ICO.

Chief Executive Officer of FSRA Richard Teng (Richard Teng) said:

"ICOs have changed the landscape of capital formation, and the global regulatory framework is evolving to adapt to such innovations. Participants who study the launch of ICO, offering real value to the market and wishing to operate within our regulatory framework, are encouraged to engage early in order to get an idea of ​​the functionality in the regulatory regime".

Crypto currency is a commodity
The FSRA, which is also the financial controller of Abu Dhabi, has determined that virtual currencies are not a legal tender, but possess characteristics that are more characteristic of physical goods such as precious metals and fuel because of their inherent value:

Therefore, from a regulatory perspective, virtual currencies are treated as goods that are not designated investments, as defined in the FSMR. This means that "mining" or spot agreements in virtual currencies do not in themselves constitute regulatory activity.
However, any regulated companies that provide or use virtual currencies for financial services will have to adhere to existing laws on combating money laundering and combating the financing of terrorism.

Regulation of bitcoin in the future
The Abu Dhabi regulator did not rule out the possibility of using a crypto currency, such as bitcoin, according to its regulatory rules. Referring to the recent finteh-agreement with the regulatory partner in Japan, FSRA stock market director, Wai Lum Qwok, said that the controller company is negotiating with the Japanese Financial Services Agency (FSA) about its bitcoin regulation. Japan recognized bitcoin as the legal method of payment in April this year. And more recently, the authorities granted 11 licenses for bitcoin-exchanges operating in the country.

The head of the FSRA stock market, Wai Lum Kwok, states:

"For us, we see a lot of problems in regulating what was developed precisely in order not to be regulated. Recently we provided a fintech connection with the Japanese FSA, and thanks to this cooperation we hope to see how they regulate them and the risks they see ... We are open to introducing virtual currencies into the regulatory space".