FSRA Proposes New Rules for Fiat-Referenced Tokens in ADGM

The landscape of digital assets in the United Arab Emirates is evolving at a rapid pace. On 9 September 2025, the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) released Consultation Paper No. 9 of 2025, outlining a proposed regulatory framework for activities involving Fiat-Referenced Tokens (FRTs), including stablecoins.

If your business issues, trades, holds, or accepts digital tokens pegged to traditional currencies, these proposals could significantly impact how you operate in ADGM and the wider UAE market.

Why the FSRA’s FRT Proposals Matter

FRTs, often referred to as stablecoins, have surged in popularity as a bridge between traditional money and the digital economy. But with innovation comes responsibility: ensuring these tokens are safe, transparent, and well-governed.

The FSRA’s proposals aim to strike that balance by introducing clear rules, licensing pathways, and consumer safeguards. This is not just regulatory housekeeping. It is a pivotal step toward building trust and stability in the UAE’s fast-growing digital asset sector.

Who Will Be Impacted by the Proposed FRT Framework

The proposed framework is particularly relevant to:

• Crypto-asset exchanges facilitating FRT trading

• Custodians and broker-dealers holding client FRTs

• Payment service providers using FRTs for transactions

• Asset managers and fintech intermediaries offering FRT-based products

• FRT issuers seeking to launch new tokens

Legal, compliance, and risk professionals advising these businesses should also closely follow these developments.

Key Changes in the FSRA’s Proposed FRT Regulations

1. Accepted FRT List: New Criteria for Token Approval

• FRTs issued within ADGM will be automatically accepted.

• Foreign-issued FRTs must meet standards on reserves, anti-money laundering (AML) and traceability, regulatory oversight, and commercial utility before being approved.

Why this matters: Businesses will know upfront which tokens can be safely used in ADGM, reducing regulatory uncertainty.

2. Expanded Regulated Activities: Custody and Payments

• The regulated activity of Providing Custody will now expressly include FRTs.

• Payment service providers using FRTs must obtain specific authorisation and comply with safekeeping, technology resilience, and resolution planning requirements.

Why this matters: Firms cannot assume existing licences cover FRT activities. New authorisations and risk controls will be needed.

3. New FRT Intermediation Activity: Licensing for Trading Firms

• A new Category 4 regulated activity will be created for firms that buy and sell FRTs as a standalone business.

• These firms must follow dedicated conduct rules and maintain a US$50,000 base capital.

Why this matters: This creates a clear licensing route for startups focusing solely on FRT trading, encouraging innovation while setting minimum safeguards.

4. Safekeeping and Use of FRTs: Strengthening Client Asset Protection

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

• Only Accepted FRTs may be used as payment for services within ADGM.

Why this matters: Stronger protection of client assets builds market confidence, a critical factor for startups attracting users and investors.

5. Issuer Requirements: Streamlined Approvals and Restrictions

• Simplified notifications for certain approvals aim to speed up market entry.

• A ban on Dirham-denominated FRT issuance by ADGM-licensed firms has been proposed.

Why this matters: Issuers gain clarity on compliance obligations, while systemic risk in the UAE’s local currency is limited.

What This Means for the Future of Digital Finance in the UAE

The FSRA is accepting public feedback until 7 October 2025, offering stakeholders a rare opportunity to help shape the future of regulated digital assets in the UAE.

These proposals reflect a global trend: bringing stablecoins and similar tokens under robust regulatory oversight. For businesses, this means more certainty and more accountability.

For startups and entrepreneurs, the message is clear: the era of unregulated digital tokens is ending. Building in compliance from the start will no longer be optional; it will be the foundation for growth.

Key Takeaway for Startups and Fintech Founders

The proposed framework is not just about rules; it is about building trust, resilience, and long-term sustainability in the UAE’s digital asset market. Startups and fintech innovators that adapt early will be better placed to thrive as the market matures and to lead in a future where digital finance and regulation go hand in hand.

Looking Ahead

As the regulatory landscape around digital assets continues to evolve, understanding and adapting to new obligations will be key. Smart Counsel helps businesses interpret emerging rules like the proposed FRT framework and integrate compliance considerations early, supporting sustainable growth in a shifting market.