Abu Dhabi regulator offers fintech sandbox for blockchain startups

Crazy Review : In order to promote the development of blockchain startups and improve the efficiency of the regional financial sector, the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM) has issued a proposal to create a sandbox environment suitable for the development of startups in the field of Internet finance, with the aim of jointly developing blockchain proof mechanisms. This initiative can make the UAE a leader in the development of blockchain technology and Internet finance in the Middle East. To achieve this goal, some incentives have been issued, including full foreign ownership and tax exemption policies.

Translation: Nicole

An independent regulator set up by the Emirate of Abu Dhabi in its newest financial free trade zone is working to promote the development of blockchain startups and improve efficiency in the region’s financial sector.

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The Financial Services Regulatory Authority (FSRA), one of three departments at the Abu Dhabi Global Market (ADGM), has issued a consultation paper detailing its proposal to create a sandbox environment for the fintech sector where startups can operate for up to two years under a flexible regulatory framework.

The FSRA’s proposal targets startups that “can significantly advance the development, efficiency and competitiveness of the financial sector,” and the consultation document goes on to cite a number of examples of technologies that would qualify.

The consultation document states:

“The advent of robo-advisors can reduce costs, enable real-time portfolio analysis and monitoring; or use blockchain technology and distributed databases to perform market pricing, write smart contracts, clear financial transactions, etc., which can have safer and higher-quality products while increasing production.”

The proposal is evidently due to the UAE’s growing enthusiasm for blockchain. In Dubai, for example, as many as 30 regional startups, government agencies and regional corporate companies came together this year to develop a blockchain proof of concept.

Raza Rizvi, a commercial IP lawyer at Simmons & Simmons in the UAE, said the development was an indication that the emirate is seeking to attract a wider range of businesses and financial institutions, although he said the proposal would require collaboration to complete.

Raza Rizvi

He said:

“There is no doubt that these two independent proposals can bring good results and make the UAE a leader in the field of Internet finance and the application of blockchain technology in the Middle East.”

ADGM, which was established in late 2015, has been particularly active in recent months, appointing a regulatory committee in January and earlier this week signing an agreement with fintech accelerator Flat6Labs to promote collaboration between startup incubators and regulators to foster an enabling environment for innovation.

The move is part of a long-term strategy to attract the financial services industry to the UAE capital, with incentives including full foreign ownership and tax exemptions.