TLDR
- ADGM has introduced a proposal to establish a regulatory framework for crypto mining activities within the UAE.
- The framework will offer commercial licenses for crypto mining entities, adhering to both ADGM and UAE Federal laws.
- The licensing will cover various blockchain technologies including proof of work and proof of stake models.
- ADGM will implement governance standards requiring beneficial ownership disclosure and risk-based supervision of operations.
- A key feature of the framework is global oversight, allowing ADGM entities to manage international crypto mining operations.
The Abu Dhabi Global Market (ADGM) has announced plans to introduce a new regulatory framework for crypto mining activities. The proposal aims to provide clarity and governance standards for entities engaged in crypto mining within or from the UAE. This initiative marks an important step in ensuring responsible innovation while addressing potential risks within the sector.
ADGM Proposes Licensing Framework for Crypto Mining Entities
The ADGM’s proposed licensing framework will regulate crypto mining under a commercial license rather than a financial one. The framework will apply to crypto mining entities, providing clear operational guidelines. However, all entities must also comply with UAE Federal laws, which govern various sectors including crypto-related activities.
Entities seeking to engage in crypto mining within ADGM will be expected to maintain operational integrity. The proposal includes governance standards such as beneficial ownership disclosure and adherence to risk-based supervision. These measures aim to balance innovation with operational resilience, focusing on cybersecurity and transparency.
The licensing process will apply across different types of blockchain networks, including proof of work, proof of stake, and others. This technology-neutral stance allows ADGM to accommodate a variety of crypto mining practices. The proposal is designed to ensure that operations meet high standards without stifling technological progress.
Global Oversight and Cross-Border Management
A key feature of ADGM’s proposed framework is global oversight for crypto mining operations. This will allow registered entities to oversee and manage mining operations across different jurisdictions. ADGM believes that this oversight will improve the overall governance of global crypto mining, ensuring consistent standards across borders.
The global oversight will allow ADGM-headquartered entities to conduct due diligence on host jurisdictions. It will also enable these entities to apply consistent governance standards to their international operations. Dmitry Fedotov, Head of Emerging Technology at ADGM, commented, “There’s value in establishing clear expectations for how headquarters entities should exercise oversight.”
ADGM is actively seeking feedback on this new concept, especially regarding cross-border mining oversight. The authority is asking for responses from crypto mining entities, auditors, and other industry stakeholders.
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