The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) has issued Consultation Paper No. 9 of 2025, outlining a proposed regulatory framework for activities involving fiat-referenced tokens (FRTs).
The FSRA is inviting public feedback on the proposals, with the consultation open until October 7, 2025.
The initiative builds on ADGM’s December 2024 framework, which formally recognized FRT issuance as a regulated activity. FRTs, a type of stablecoin backed by high-quality liquid assets and pegged to a single fiat currency, have been increasingly used across payment services and digital finance platforms.
Expanding the Scope of Regulation
The consultation paper proposes to broaden the scope of regulated activities beyond issuance, introducing clearer requirements for:
- Acceptance of FRTs: The FSRA will maintain a list of “Accepted FRTs,” which includes both domestically issued tokens and eligible foreign tokens such as USDC, USDP, and USDT. Criteria for foreign issuers include reserve adequacy, AML traceability, and regulatory oversight in their home jurisdictions.
- Custody and Payment Services: Custodians will be formally regulated when holding FRTs, aligning requirements with those applied to virtual assets. Payment service providers using FRTs must comply with conduct rules covering safekeeping, disclosure, and AML obligations.
- FRT Intermediation: A new regulated activity would cover firms acting as intermediaries in buying and selling FRTs on behalf of clients or issuers. This seeks to bring greater oversight to liquidity providers while applying proportionate prudential requirements.
Strengthening Oversight of Issuance
The FSRA also proposes amendments to the 2024 issuance framework. These include replacing certain pre-approval requirements for third-party reserve managers with a notification system, clarifying supervisory powers, and explicitly prohibiting the issuance of dirham-denominated FRTs in line with Central Bank of the UAE policy.
Safeguards for Client Assets
Authorised Persons holding or controlling client FRTs would need to comply with safe custody rules, including wallet segregation, enhanced reporting, and reconciliation standards similar to those applied to virtual assets.
Next Steps
The FSRA is seeking written feedback on all aspects of the proposals, particularly the criteria for foreign FRT acceptance, the introduction of FRT intermediation as a regulated activity, and the proposed fee structures.
Responses will inform the final amendments, which will be enacted by the ADGM Board following the consultation period.
Consultation paper available here.
