The independent regulatory authority of Abu Dhabi's newest financial free zone is seeking to promote the development of blockchain startups as part of a drive to create new efficiencies in the regional financial sector.
The Financial Services Regulatory Authority (FSRA), one of three divisions of the Abu Dhabi Global Market (ADGM), has released a consultation paper in which it detailed its plans to create a sandbox environment for FinTech under which startups would be allowed to work under a flexible regulatory framework for up to two years.
The FSRA's proposal would seek to limit startups accepted into the program to those that "promote significant growth, efficiency or competition in the financial sector", though the paper goes on to cite examples of technologies that fit this description.
The paper reads:
Notably, the proposal follows growing enthusiasm for blockchain in the UAE. In Dubai, for example, more than 30 regional startups, government agencies and regional enterprise businesses have come together so far this year to begin working on proofs-of-concept with the technology.
Raza Rizvi, a UAE-based commercial IP lawyer with Simmons & Simmons, sees the development as perhaps more indicative of Abu Dhabi’s wider push to attract enterprise financial institutions, though he said the initiatives could prove synergistic.
"No doubt the two independent initiatives will bring out the best in each other and enable the UAE as a whole to lead the way in the FinTech sector and usage of blockchain technology in the Middle East," he said.
The efforts are seen as 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.
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