The Registration Authority of the Abu Dhabi Global Market (ADGM) has recently released a consultation paper outlining proposals for a legal framework for Distributed Ledger Technology (DLT). The authority is currently seeking public feedback on the key proposals, with the deadline for comments set for Friday, 12 May 2023.
Designing a new regime for DLT foundations
The consultation paper identifies an opportunity for the authority to develop a new framework specifically for DLT Foundations. This framework would “cherry-pick” attractive features for DLT project developers, proposing creating a standalone DLT foundations framework instead of amending ADGM’s existing foundations regime. The proposal suggests a minimum initial asset value of USD 25,000 for DLT Foundations.
Recognizing token holders’ legal status and emphasizing transparency
The document also recognizes the legal status of token holders, stating that “decentralized governance is expressly provided for, with token-holders having the right to vote on certain matters unless expressly stated otherwise in the Charter.” The proposal highlights the importance of transparency, fairness, and the submission of audited annual accounts.
The paper does not propose any specific marketing obligations but grants the Registrar the authority to impose temporary prohibition orders on marketing based on public policy grounds.
The proposed framework showcases ADGM RA’s recognition of the suitability of foundation structures for DLT projects and highlights the authority’s commitment to supporting and fostering crypto and DeFi-related developments.