The Registration Authority of the Abu Dhabi Global Market [ADGM] recently published a consultation paper. The same put forth proposals for a legal framework for Distributed Ledger Technology [DLT].
The authority’s key proposals for the new regime revolve around the structure of the DLT foundations, governance and control, tokens, token-holder voting, reporting and disclosures, beneficiaries, profit distribution, supervision, liquidation or voluntary strike-off, and insolvency. The authority is currently seeking public feedback and comments on it. As far as the last date is concerned, the document noted,
“The deadline for providing comments on the proposed framework is Friday, 12 May 2023. After receiving your comments, we shall consider whether any modifications are required to the proposals, and the ADGM Board of Directors (Board) will then proceed to enact the proposal in their final form.“
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Proposals for the design of the new regime
The latest paper highlighted that there is an “opportunity” for the authority to design a new framework, specifically for DLT Foundations, in a manner that “cherry-picks” the features of foundations that “might be attractive to developers of DLT projects.” Specifically, the proposal batted for the creation of a “standalone DLT foundations framework” rather than amending ADGM’s existing foundations regime. With respect to the initial asset value, it suggested,
“DLT Foundations shall have a minimum initial asset value of USD 25,000.”
Furthermore, the proposal recognized token holders’ legal status. According to the document,
“Decentralised governance is expressly provided for with token-holders having the right to vote on certain matters, unless express stated otherwise in the Charter.”
The proposal also stressed the importance of transparency, fairness, and audited annual account submissions. Moving on, “no specific marketing obligations are proposed.” However, the Registrar will have the power to impose temporary prohibition orders on marketing on public policy grounds.
The latest framework suggestion brings to light ADGM RA’s recognition of the overall suitability of foundation structures for DLT projects. In fact, it also highlighted the authority’s alignment with ADGM’s plan to support and foster crypto, DeFi related developments.
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