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Abu Dhabi Issues Cryptocurrency and ICO Regulations

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    The government of Abu Dhabi has released guidelines on virtual currencies and initial coin offerings. The government of Abu Dhabi has published PDF guidelines to bring clarity to its regulatory approach to ICOs and virtual currencies for ICO organizers and digital currency adopters.

    ICOs will only be regulated if seen as securities. Under the new guidelines, companies wishing to organize an ICO are now mandated to approach the FSRA where the authority will determine if the token offering is to be regulated as a security. If the FSRA determines the token falls outside the definition of a security, the token offering will remain unregulated.

    The FSRA underlined ICOs as “a novel and potentially more cost-effective way of raising funds for companies and projects.” Altogether a decidedly contrasting approach to the likes of China and South Korea who imposed blanket bans on ICOs.

    Virtual currencies will be treated as commodities, which are not Specified Investments as defined under the FSMR. This means that a “mining” or spot transaction in virtual currencies will not constitute a Regulated Activity in itself. Nonetheless, any regulated firms enabling or using virtual currencies for financial services will have to adhere to existing laws regarding anti-money laundering and combating the financing of terrorism.

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