MFTA Report: ADGM Expands Digital Asset and Staking Regulatory Framework

he Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) is expanding its regulatory approach to digital assets as the sector moves beyond trading and custody toward staking, stablecoins, tokenization and more complex financial products.

The latest developments were outlined in a report by the MENA Fintech Association (MFTA), following the association’s participation in the FSRA’s semi-annual regulatory update session on May 19, 2026. Around 20 representatives from fintech and digital asset companies took part in the session.

The discussion was led by Co-Chair of the MENA FinTech Association (MFTA) Policy & Regulations Working Group, Christine Abou Assali, alongside Lawrence Paramasivam and Margaret Devany from the FSRA’s Policy and Legal team.

ADGM’s Digital Asset Market Broadens

According to the report, ADGM’s digital asset ecosystem is evolving from a market primarily focused on price exposure and custody into a broader financial environment that includes retail participation, yield-generating products, tokenized assets, structured products, lending and borrowing.

Between 2,100 and 2,200 digital assets are currently being used across regulated entities in ADGM, underscoring the expanding range of assets available to institutional market participants.

That growth has been accompanied by a wider supporting infrastructure, including independent custodians, brokerage platforms, freezing service providers, cybersecurity assessment firms, compliance providers and transaction-monitoring tools.

The development of this ecosystem is intended to lower barriers for new entrants while allowing regulated firms to build increasingly sophisticated operating models.

The FSRA has also shifted responsibility for determining whether digital assets qualify for use toward regulated entities themselves. Firms must assess assets against the Authority’s Accepted Virtual Assets (AVA) criteria and notify the FSRA at least five business days before beginning to use them, replacing a more centralized prior-approval approach.

ADGM Introduces a Regulatory Framework for Digital Asset Staking

One of the most significant developments highlighted in the report is the FSRA’s new framework for digital asset staking.

The framework was consulted on during 2025 and came into force at the end of April 2026. It applies to intermediary staking arrangements where digital assets are held or controlled on behalf of clients.

Self-staking and the provision of technology infrastructure alone remain outside the framework.

Rather than creating staking as a standalone regulated activity, the FSRA incorporates it into existing regulatory categories. Client-directed staking falls under the provision of custody, while discretionary staking is treated as part of asset management.

The framework can also apply to staking mechanisms other than proof-of-stake where their underlying characteristics are materially similar.

The rules place limits on the rewards that regulated firms can provide to clients. Rewards must generally take the form of accepted digital assets or Fiat-Referenced Tokens (FRTs), reducing the risk that staking rewards could result in the issuance of instruments that may be treated as securities.

Regulated firms must also notify the FSRA, provide clients with clear information about the relevant terms and risks, conduct due diligence on third-party staking providers and meet ongoing client reporting requirements.

FRTs Face Direct FSRA Approval

The report distinguishes between digital assets and Fiat-Referenced Tokens, which are treated as payment instruments and therefore require direct approval from the FSRA.

The assessment of an FRT considers four main areas: the nature and classification of the instrument, anti-money laundering requirements, the adequacy of its reserves and the jurisdiction in which the issuer is based.

ADGM-issued dirham-referenced tokens can be included automatically among accepted FRTs. The framework also recognizes dirham-denominated stablecoins approved by the Central Bank of the UAE under its applicable regulatory framework.

The FSRA does not permit the direct issuance of AED-denominated stablecoins from ADGM, reflecting the division of regulatory responsibilities between the FSRA and the UAE central bank. At the same time, UAE central bank-approved dirham stablecoins can be used within ADGM.

The framework extends to custody and payment services and introduces an FRT brokerage pathway within money services activities. Supervisory permissions can also vary according to the individual network involved and a firm’s ability to conduct transaction monitoring and Know Your Transaction (KYT) controls.

AML Rules Align With Federal and FATF Standards

The FSRA has also updated its anti-money laundering framework, with the changes completed on May 21, 2026.

The revisions are intended to bring ADGM requirements closer to UAE federal legislation, Financial Action Task Force (FATF) standards and findings from the UAE’s mutual evaluation.

Among the changes, senior management must explicitly approve the continuation of relationships with customers classified as high risk.

The updated framework also clarifies the distinction between relying on another party to carry out customer due diligence and outsourcing those activities to an external service provider.

Travel Rule requirements have also been reorganized into separate frameworks for traditional bank transfers and transactions involving digital assets and FRTs, allowing the requirements to better reflect the characteristics of each activity while remaining aligned with federal standards.

Tokenization and AI Move Further Into the Regulatory Framework

The regulatory agenda extends beyond digital assets themselves as tokenization increasingly intersects with conventional financial markets.

Tokenized fund units and tokenized real-world assets remain subject to existing regulatory frameworks governing funds and securities. The underlying financial product determines which regulatory requirements apply.

Artificial intelligence is also becoming part of the FSRA’s supervisory agenda. The regulator is taking a principles- and governance-based approach, while maintaining requirements that designated functions must be performed by natural persons.

That means AI agents cannot replace individuals performing formally approved functions such as compliance roles.

The FSRA is also continuing testing within ADGM’s regulatory environment around the potential impact of quantum computing on cryptographic key security, as advances in quantum technology could eventually challenge elements of the security infrastructure underpinning financial services.

FSRA Plans DeFi and AI Initiatives

Further regulatory developments are expected during the second half of 2026.

The FSRA plans to publish guidance on how regulated firms should approach decentralized finance (DeFi), while also preparing to launch RegBuddy, an AI-powered conversational system intended to help companies navigate regulatory requirements.

The regulator is additionally working on AI-enhanced Financial Services Permission (FSP) applications, alongside updates to its frameworks covering outsourcing, operational risk and concentration risk.

The work also includes preparations for upcoming FATF assessments and the Financial Sector Assessment Program (FSAP).

Together, these initiatives point to a broader effort by the FSRA to incorporate technology into both regulation and supervision, including the use of AI-based tools to help firms interpret regulatory requirements.

MFTA Calls for Continued Regulatory Dialogue

MENA Fintech Association Chairman and Fils founder Namir Khan said regulatory clarity remains central to sustainable financial innovation, emphasizing the importance of continued engagement between regulators and private-sector companies as technologies, business models and market infrastructure evolve.

MFTA said its regulatory update sessions are intended to turn regulatory discussions into practical information that companies can use to understand changing requirements and prepare for developments affecting financial services.

The latest report illustrates how ADGM’s regulatory agenda is moving beyond establishing the foundations for a digital asset market. Staking, FRTs, AML requirements, tokenization, artificial intelligence and emerging technology risks are increasingly becoming part of the framework governing how digital financial services operate.

As the ecosystem expands, the regulatory focus is shifting from simply defining which products can enter the market toward establishing how those products are operated, governed and monitored within a regulated financial system.