News: Financial regulator of Abu Dhabi: the rules of regulation of ICO of the companies

Financial regulator of Abu Dhabi: the rules of regulation of ICO of the companies

The financial regulator of Abu Dhabi published rules for the regulation of ICO of the companies

Recently, the Financial Services Regulation Authority of Abu Dhabi (FSRA) has made public recommendations for ICO and virtual currencies.

The recommendations were published with a view to clarifying the government's regulatory approach to cryptocurrency and ICO for both digital currency consumers and organizers.

On the regulation of ICO

According to Christopher Kiv-Smith, chairman of the fintech strategy at the Financial Services Regulatory Authority, the diversity of the ICO market, in terms of quality, created favorable conditions for creating high-risk ICOs.

Also, he added that for those people who are constantly looking for income and decided to earn due to such an area as the initial offering of tokens, there is a constant risk because of the lack of financial reports and disclosure of information.

Now,  the company which wants to organize Initial Coin Offeringmust apply to the FSRA. This authority should determine whether the token falls within the scope of the determinations of security. If it falls outside of the scope of these determinations, such an offering will be rejected.

In the FSRA, ICO is considered a new and potentially more cost-effective means of raising funds for projects and companies.

Determination of the cryptocurrency as a commodity

Being also a financial controller of Abu Dhabi, the FSRA does not consider virtual currency to be a legal mean of payment. According to experts, virtual currency, in view of its inalienablevalue, has features more specific totangible goods and commodities (fuel, precious metals and the like).

Due to the foregoing, from the regulatory point of view,virtual currency is treated as a commodity that is not an intendedinvestment, as defined in the FSMR.

And any regulated company that provides and uses virtual currency is required to comply with existing laws on combating the financing of terrorism and money-laundering.

How will bitcoin be regulated in the future?

In Abu Dhabi, the use of bitcoin in the near future according to its regulatory rules is not excluded.

For more detailed information, please contact the lawyers of Law&Trust International.