The Abu Dhabi Global Market (ADGM) Introduces Comprehensive Regulations for Web3 Organizations
The Abu Dhabi Global Market (ADGM) Registration Authority has implemented new regulations that govern Web3 organizations. These regulations are the first of their kind and have been specifically designed for the international financial free zone, according to the agency.
Regulations for Distributed Ledger Technology Foundations
The new regulations, known as the Distributed Ledger Technology (DLT) Foundations Regulations, provide guidelines for blockchain foundations, Web3 entities, decentralized autonomous organizations (DAOs), and traditional foundations expanding into DLT. Blockchain foundations offer financial and other types of support to a blockchain without direct involvement in its operations.
To establish a “DLT Foundation,” organizations must submit a signed charter containing information about the foundation’s initial assets, governance structure, token issuance plans (if any), as well as additional documents such as white papers, tokenomics papers, and a technical document called a DLT Framework.
Key Requirements for Foundations
A foundation must disclose the names of its key figures; however, this information will not be made public. Additionally, the foundation’s name must end with “DLT Foundation.” For managerial and administrative purposes, it is required to have a council comprising two to 16 members. The foundation is prohibited from conducting activities that require licensure from the ADGM Financial Services Regulatory Authority. Token holders will be considered beneficiaries of the foundation.
Hot Take: ADGM Leads the Way in Regulating Web3 Organizations
The introduction of comprehensive regulations by the Abu Dhabi Global Market Registration Authority demonstrates their commitment to fostering a favorable environment for Web3 organizations. The purpose-built regulatory framework sets an important precedent for other jurisdictions looking to regulate blockchain and decentralized technologies. By providing clear guidelines for the operation of blockchain foundations, Web3 entities, and DAOs, the ADGM aims to promote transparency, accountability, and investor protection in the rapidly evolving digital asset landscape. These regulations position ADGM as a leading global hub for innovative blockchain projects and showcase their forward-thinking approach to embracing emerging technologies.
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