The Registration Authority of the Abu Dhabi Global Market has published a consultation paper on a new legal framework for Distributed Ledger Technology foundations.
The Registration Authority of the Abu Dhabi Global Market (ADGM), an international financial center in the UAE capital, has published a consultation paper on a new legal framework for Distributed Ledger Technology (DLT) foundations.
Key Proposals for New Regime
The paper proposes a set of rules and regulations for the establishment and operation of DLT foundations, which are entities that use DLT to manage their assets and governance.
It covers DLT foundations’ aspects, such as structure, governance, tokens, voting, reporting, beneficiaries, profit, supervision, liquidation and insolvency.
The paper suggests a DLT-friendly and protective framework that meets global and ADGM’s legal norms.
It welcomes public discussion and suggestions by Friday, May 12, 2023. After receiving the comments, the ADGM Board of Directors will enact the proposal in its final form.
The paper suggests ADGM create a DLT-specific framework that selects the best features of foundations for DLT developers.
For instance, the report advises DLT foundations to start with USD 25,000 and give token holders legal and voting rights.
Key Expectations
The paper also emphasizes the importance of transparency, fairness, and accountability for DLT foundations.
It proposes that DLT foundations submit audited annual accounts and disclose relevant information to their token holders and beneficiaries.
The Registration Authority shall supervise DLT foundations and provide clear liquidation or voluntary strike-off procedures in event of insolvency or dissolution.