ABU DHABI GLOBAL MARKET INVITES APPLICATIONS FOR 5th REGLAB COHORT FOCUSING ON THE DECENTRALISED WEB 3.0 AND TOKEN ECONOMY
Successful applicants will receive the sandbox licence to test smart contracts enabled by blockchain and virtual assets in the digital testing environment of ADGM’s Digital Lab, under the guidance of ADGM’s financial services regulator
11 May 2022, Abu Dhabi UAE: The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) has opened its Regulatory Laboratory (RegLab) sandbox programme for the 5th cohort of applications today. The 5th Reglab application is open until 15th July 2022 and will focus on innovation in financial services powered by decentralised applications and protocols.
ADGM’s Reglab is a tailored regulatory regime for FinTech participants which is designed to foster innovation within the UAE financial services market, for both new entrants and existing financial and regulated companies. The theme of the 5th Reglab is “DeFi”, an emerging part of the global financial ecosystem that holds the promise of delivering more efficient and tailored financial services.
DeFi has gained traction in recent years and created opportunities to transform the delivery of financial services. DeFi enables direct access to financial services without the need for an intermediary financial institution by interacting with smart contracts based on distributed ledger technology (DLT) and virtual assets, thereby reducing intermediation costs. For instance, a decentralised autonomous organisation (DAO) that operates a multi-signature wallet to manage community treasuries can be a form of DeFi. The development of robust and efficient DeFi services can help develop a strong foundation for Web 3.0 by creating an effective mechanism for managing the transfer of value between decentralised Web 3.0 services.
While DeFi has the potential to positively impact the financial services sector, it has some associated risks. The FSRA recently issued a discussion paper to establish a dialogue with the industry, which can provide valuable insights for the FSRA in developing future policy choices to address these risks through appropriate regulations. Any future regulatory framework must ensure the relevant risks are mitigated, in order to fully realise the potential benefits of DeFi.
Testing DeFi Solutions on ADGM’s Digital Sandbox Infrastructure
To further enhance its engagement with this new generation of solutions, the FSRA is looking to the DeFi community to recruit the next cohort of applications for its RegLab programme. This would also include innovative solutions that can enhance the FSRA’s capability to appropriately supervise DeFi applications.
The RegLab allows fintech innovators to develop and test their applications and protocols in a controlled environment under the supervision and guidance of the FSRA. To aid the development and tests of the DeFi solutions with the regulator, applicants will have direct access to the Digital Lab, an online sandbox environment provided by the FSRA. The application period will close on 15 July 2022.
“As the financial services sector continues to evolve globally at a rapid pace, the FSRA needs to remain agile in policy thinking and regulatory tools to address emerging risks while supporting the opportunities that DeFi can bring. To this end, the formulation of an appropriate regulatory framework will be a key to ensuring trust and confidence in the deployment of DeFi protocols. Through the RegLab programme, we are committed to working closely with the Web 3.0 community of talent in tapping the potential of DeFi” said Mr Emmanuel Givanakis, Chief Executive Officer of the FSRA.
About Abu Dhabi Global Market (ADGM)
Abu Dhabi Global Market (ADGM), an international financial centre (IFC) located in the capital city of the United Arab Emirates, opened for business on 21 October 2015. Established by a UAE Federal Decree as a broad-based financial centre, ADGM augments Abu Dhabi’s position as a global trade and business hub serving as a strategic link between the growing economies of the Middle East, Africa and South Asia and the rest of the world.
ADGM’s strategy is anchored by Abu Dhabi’s key strengths spanning over private banking, wealth management, asset management, derivatives and commodities trading, financial innovation, sustainability and more. Comprising three independent authorities: ADGM Courts, the Financial Services Regulatory Authority and the Registration Authority, ADGM as an IFC governs the entire 114 hectares (1.14sqkm) of Al Maryah Island which is a designated financial free zone.
It enables registered financial and non-financial institutions, companies and entities to operate, innovate and succeed within an international regulatory framework based on common law. Since its inception, ADGM has been awarded the “Financial Centre of the Year (MENA)” for four consecutive years for its initiatives and contributions to the financial and capital markets industry in the region.*
For more details on ADGM, please visit www.adgm.com or follow us on Twitter and Instagram: @adglobalmarket and LinkedIn: @Abu Dhabi Global Market (ADGM)
* Source: The Global Investor Middle East and North Africa (MENA) Awards