Abu Dhabi, the capital city of the United Arab Emirates, announced that it is planning to establish a regulatory framework for the virtual currency exchanges and intermediaries.
The Abu Dhabi Global Market, which is an international financial centre set up in 2015, said in a statement that its Financial Services Regulatory Authority "is reviewing and considering the development of a robust, risk-appropriate regulatory framework to regulate and supervise activities of virtual currency exchanges and intermediaries."
The FSRA had issued guidance on the regulatory treatment of initial coin offerings, or ICOs, and virtual currencies in October last year.
As per the guidance, tokens which exhibit the characteristics of specified investments will be regulated as such within the agency's regulatory framework.
Virtual currencies are treated as commodities, where the derivatives trading of virtual currencies is regulated under the existing market regulations, while spot trading of virtual currencies is not.
The FSRA guidance also cautioned consumers seeking outsized investment returns from trading in virtual currencies due to their price volatility.
"ICO tokens and virtual currencies do not always fit neatly into existing regulatory classifications," the FSRA said, welcoming participation from the industry regarding formulating regulation.
Virtual currencies are not legal tender, but they are gaining interest globally as a medium of exchange for goods and services, the agency said.
"Until further updates, the FSRA reminds market participants using ICOs and virtual currencies to approach FSRA to discuss appropriate treatment within the regulatory regime," the agency added.
The ADGM was established as a broad-based financial centre and augments Abu Dhabi's position as a global hub for business and finance.
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