Establishing a Virtual Asset Service Provider (VASP) in Abu Dhabi in 2024
As interest and demand for virtual assets continue to surge, the Financial Services Regulatory Authority (FSRA) has pioneered the establishment of a secure and regulated infrastructure. This ranks the Abu Dhabi Global Market (ADGM), as the world’s first jurisdiction to launch and enforce a comprehensive regulatory framework for virtual assets.
The ADGM has as a mission to attract responsible virtual asset entities such as multilateral trading facilities, brokers, custodians, asset managers and other intermediaries involved in virtual asset activities. ADGM’s mandate is to uphold a high-standard regulatory regime which builds market trust and encourages groups, corporations, and individuals to get involved with the virtual asset market. As a result, the FSRA’s focus has increasingly been on ensuring robust governance and oversight, along with promoting market transparency.
Throughout this article, the SALVUS Crypto-Assets Licensing team shares valuable information for establishing a Virtual Asset Service Provider (VASP) in Abu Dhabi, as follows:
1. What is a virtual asset?
2. Which virtual asset activities are regulated by the FSRA?
3. Regulatory Fees and Capital Requirements
4. Application Timeframe
5. How SALVUS can assist your FSRA application
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1. What is a virtual asset?
A virtual asset is considered a digital representation of value that can be digitally traded, and functions as:
- a medium of exchange; and/or
- a unit of account; and/or
- a store of value but does not have legal tender status in any jurisdiction.
A virtual asset is not issued or guaranteed by any government and operates based on mutual agreement within its user community. It is distinct from both fiat currency and electronic money.
2. Which virtual asset activities are regulated by the FSRA?
Businesses that are currently involved in or plan to engage in virtual asset activities within the ADGM must apply for and obtain the appropriate license according to the Financial Services and Markets Regulations (FSMR) provisions. The following list consists of the FSRA regulated activities relating to virtual assets:
- Dealing in Investments as Principal
- Buying or selling virtual assets as principal.
- Dealing in Investments as Agent
- Buying or selling virtual assets as agent.
- Arranging Deals in Investments
- Making arrangements with a view to another person buying or selling a specified virtual asset.
- Making arrangements with a view to another person who participates in the arrangements buying or selling a specified virtual asset.
- Advising on Investments or Credit
- Advice on the merits of buying or selling a virtual asset.
- Providing Custody
- Safeguarding virtual assets.
- Administering virtual assets for safeguarding.
- Operating a Multilateral Trading Facility (MTF)
- The operation of a Multilateral Trading Facility on which virtual assets are traded.
- Managing Assets
- Managing on a discretionary basis assets belonging to another person if the assets include any virtual asset.
The FSRA is an activities-based regulator. Thus, each entity is required to apply for a Financial Services Permission (FSP) covering only the regulated activities it proposes to conduct.
3. Regulatory Fees and Capital Requirements
Operating as a Virtual Asset Service Provider entails higher regulatory fees and capital requirements compared to other FSRA activities, recognizing the substantial risks posed. The following table provides the relevant information divided for VASP operating as MTF and for VASP providing intermediary activities.
| Features | MTF | MTF and Virtual Asset Custodian | Non-Custody Intermediary Activities | Non-Custody Intermediary Activities and Virtual Asset Custodian |
|---|---|---|---|---|
| FSRA Authorisation fee | 125,000 USD | 145,000 USD | 20,000 USD | 40,000 USD |
| FSRA Supervision fee | 60,000 USD | 75,000 USD | 15,000 USD | 30,000 USD |
| ADGM Registration fee | 15,000 USD | 15,000 USD | 15,000 USD | 15,000 USD |
| ADGM Annual Renewal fee | 13,300 USD | 13,300 USD | 13,300 USD | 13,300 USD |
| Capital requirements | 12-month operational expenses | 12-month operational expenses | 6-month operational expenses | 6-month operational expenses |
The application will not be regarded as submitted until the fee and any associated supplementary fee has been paid in full.
4. Application Timeframe
VASP regulated entities seeking to be authorised for conducting regulated activities relating to virtual assets shall be prepared to have a strong engagement with the FSRA.
The completion of the entire procedure, from the applicant’s first contact with the FSRA until going live is estimated between 12 to 24 months. This is based on the complexity of the proposed business model and activities and the applicant’s preparedness to fulfil the FSRA requirements.
5. How SALVUS can assist your FSRA application
The SALVUS Crypto-Assets Licensing team consists of industry-leading professionals, equipped with significant experience and expertise relating to the registration and licensing of varying fintech projects. We process every enquiry through our project management approach, guiding you in selecting the structure and set of regulated activities that correspond to your business model and objectives.
Furthermore, we introduce you to the regulator and work closely with your team, collecting and preparing the required documentation, to submit a complete application to the regulator, ensuring instantaneousness.
Please contact us at info@salvusfunds.com or call us at +357 7000 7898 if you are interested in setting up a VASP in Abu Dhabi or providing virtual asset services in the United Arab Emirates.
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The information provided in this article is for general information purposes only. You should always seek professional advice suitable to your needs.