The Abu Dhabi Global Market will release a framework that would permit cryptocurrency exchanges and platforms to have the free will to trade NFTs in the free trade zone. The country released a consultation paper on Monday that contained some proposals to enhance capital markets and digital assets, including NFTs.
The consultation paper pinpointed the growing NFT market and its relevance in the broader market. It said that although NFTs can be grouped in the same category as intellectual property rights, they may not constitute financial instruments.
“At this point, the FSRA may not propose the establishment of a proper regulatory guideline. However, it isn’t ruling out the possibility, as it will welcome other NFT activities,” the paper said.
What the Guidelines Entail Regarding NFT Trading
The guideline said any ADGM licensed crypto firm or platform that wishes to trade NFTs should do so under the Anti-Money Laundering laws. This entails that conducting NFT trading should be in full compliance with the rules or face regulatory penalties, which could be a lengthy jail sentence or fine.
ADGM said firms should be wary of NFT transactions, adding that they may require compliance with AML laws, such as registering with the FSRA as a Non-Financial Business (DNFBP). This is enacted to effectively monitor crime and protect traders from scammers.
Abu Dhabi has maintained a friendly approach towards the nascent digital ecosystem and the underlying technology ever since blockchain became a thing. The decision to allow licensed platforms to trade NFTs is one of the forward-thinking initiatives implemented to foster development and curb criminal tendencies.
The ADGM seeks to keep its promise of monitoring market developments and playing its role diligently as a leader in the region and globally at large, especially as blockchain is gradually becoming a mainstream technology.
Embracing Blockchain
Abu Dhabi is one of the first pioneers to embrace technology in the Middle East region. The capital city first utilized blockchain in 2019 when it unveiled plans to add the land registry system to the chain.
The city collaborated with Tech Mahindra to execute the plan effectively. According to releases, Abu Dhabi intended to provide its inhabitants with blockchain solutions to reduce the time required to trace land records and process transactions.
Ahmad Abdolsamad of the Municipal said blockchain could help improve the quality of life of the citizens and enhance accessibility to services. Blockchain is taunted as the next-gen technology that will serve the broader world population, accelerate transactions, improve information storage, and boost digital services.
