The Abu Dhabi Global Market (ADGM) has emerged as a key hub for digital assets, providing a well-regulated environment for crypto and blockchain-based businesses. If you’re looking to set up a digital assets business at ADGM, the process can seem daunting at first. But with a clear understanding of the steps involved, it becomes much more manageable.

Here’s a detailed breakdown of the ADGM digital assets application process:

Step 1: Initial Inquiry and Eligibility

The first step involves determining whether your business meets the eligibility criteria to operate within the ADGM regulatory framework. This is done by submitting an initial inquiry to the ADGM Financial Services Regulatory Authority (FSRA), which oversees digital asset activities. The inquiry should detail the nature of your business, the specific services you wish to provide, and any relevant financial projections.

During this stage, the FSRA will assess your business model to ensure it complies with their framework for digital assets, which includes rigorous Anti-Money Laundering (AML) and Know-Your-Customer (KYC) requirements.

Step 2: Formal Application Submission

Once your business is deemed eligible, you will need to complete and submit a formal application. This process requires you to provide the following:

  • Business Plan: A comprehensive business plan that outlines your company's operations, digital asset services, and long-term strategy.
  • Organizational Structure: Details on your company’s ownership and governance structure, including information on key personnel.
  • Financial Information: Financial projections and capital adequacy details to show that the business is financially sound.
  • Risk Assessment: A clear risk management framework that includes the identification of potential risks and the strategies you will use to mitigate them.

This phase requires attention to detail and a solid understanding of your business model to meet the regulatory standards set by ADGM.

Step 3: Compliance with Regulatory Frameworks

A core part of the application process is ensuring that your business complies with ADGM’s digital asset regulatory frameworks. The FSRA has outlined specific rules for companies engaging in activities such as crypto exchanges, custody services, and token issuance.

The key areas you’ll need to comply with include:

  • AML/KYC Policies: Implementing strong Anti-Money Laundering and Know-Your-Customer protocols.
  • Consumer Protection: Clear policies that safeguard client funds and ensure transparency in all operations.
  • Cybersecurity: Ensuring that your business has robust cybersecurity measures in place to protect against digital threats.
  • Financial Reporting: Regular reporting on financials to maintain compliance with the FSRA’s standards.

You’ll be required to submit documentation demonstrating how your business plans to adhere to these frameworks.

Step 4: Pre-Approval and Fit & Proper Tests

If the FSRA finds that your application meets the regulatory criteria, you’ll receive pre-approval. However, this does not yet allow you to start operations. During this stage, the FSRA will conduct fit and proper tests, assessing the fitness and propriety of the firm’s management team, board members, and key stakeholders. This ensures that the people running the business are qualified, trustworthy, and capable of maintaining compliance.

Step 5: Final Approval and Licensing

Once all tests and evaluations are completed, and the FSRA is satisfied with your application, you will receive final approval. You’ll then be issued a Financial Services Permission (FSP) license, which allows you to legally operate your digital asset business within ADGM.

It’s important to note that the FSP license is only granted if your business successfully demonstrates its ability to operate in compliance with all ADGM regulatory requirements.

Step 6: Post-Licensing Requirements

Even after receiving your license, there are ongoing compliance obligations that digital asset firms must meet. These include:

  • Regular Audits: Periodic financial and operational audits to ensure continued adherence to ADGM’s regulatory standards.
  • Reporting: Timely submission of reports on financial health, cybersecurity incidents, and customer protection measures.
  • Updating the FSRA: Notifying the FSRA of any significant changes in your business structure or operations that might impact compliance.

Conclusion: Why Choose ADGM?

Setting up a digital assets business in ADGM provides several benefits, including a well-regulated environment, access to global markets, and a growing crypto-friendly ecosystem. The application process is designed to ensure that businesses operating within the jurisdiction meet the highest regulatory standards, protecting both businesses and their customers.

If you’re looking to expand your digital asset business in the UAE, ADGM offers an excellent platform for growth. However, navigating the application process can be complex, and working with experienced professionals like Nephos help ensure your business meets all requirements smoothly.