Proposed Regulatory Framework for Fiat-Referenced Tokens in ADGM

The Riffle

The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) has released Consultation Paper No. 9 of 2025, introducing an expanded regulatory framework for Fiat-Referenced Tokens (FRTs). This builds upon the 2024 Amendments, which established FRT Issuance as a regulated activity and formally distinguished FRTs from Virtual Assets (VAs).

The new proposals seek to apply robust, risk-based standards to a wider set of FRT-related financial services, aligning ADGM’s regime with global developments in stablecoin regulation.

Key Highlights

1. Framework for “Accepted FRTs”

• Regulator-led approval process for FRTs, contrasting with the self-assessment model used for VAs.

• Domestic FRTs (issued in ADGM) are automatically accepted, with Paxos Lift Dollar (USDL) already approved.

• Foreign FRTs must meet five criteria: definition as an FRT, AML traceability, adequacy of reserves, issuer jurisdiction, and marketplace use.

• Initial Accepted FRT list includes USDL, USDC, USDP, USDT, and Dirham-denominated stablecoins approved by the CBUAE .

2. Expansion of Regulated Activities

• Providing Custody: Explicitly expanded to include FRTs, aligning with existing stablecoin rules.

• Payment Services Using FRTs: Firms must meet conduct requirements from several chapters of COBS (safekeeping, resolution planning, governance).

• New Activity – FRT Intermediation: Captures standalone businesses buying/selling FRTs.

  • Requires transparent policies, disclosure of pricing/fees, and compliance with AML standards.

  • Subject to Category 4 prudential requirements with a $50,000 base capital requirement 

3. Holding, Controlling, and Accepting FRTs

• Safe Custody Rules extended to broker-dealers and asset managers holding client FRTs.

• Requirements include segregation of wallets, technology governance, written agreements with third-party agents, and weekly reconciliations.

• Firms may accept FRTs as payment, but only if they are “Accepted FRTs” and AML/KYC compliance is demonstrated .

4. Fees and Prudential Requirements

• Introduction of an “FRT surcharge” similar to the VA surcharge.

  • Payment Services with FRTs: $45,000 application, $40,000 annual fee.

  • FRT Intermediation: $30,000 application, $25,000 annual fee.

  • Other activities (e.g., custody): Standard fee + FRT surcharge.

• Firms active in both VA and FRT markets pay only one surcharge .

5. Amendments to FRT Issuance Rules

• Streamlined oversight: FSRA approval of third parties replaced by a notification-based system.

• Dirham prohibition: Issuance of AED-denominated FRTs prohibited in ADGM, aligning with the CBUAE’s position.

• Extended FSRA powers: Clarifies that the FSRA’s rule-making authority over VAs also applies to FRTs .

Conclusion

The proposed framework marks a significant evolution in ADGM’s approach to regulating stablecoins. By combining rigorous standards with operational flexibility, the FSRA aims to safeguard financial stability, address AML/CFT risks, and provide legal certainty to firms operating in this space.

The consultation period remains open until October 7, 2025, giving stakeholders an opportunity to provide feedback on these landmark proposals.

Read the Full Briefing document presented by 10 Leaves here -