1) This Guidance is issued under section 15(2) of the Financial Services and Markets Regulations 2015 ("FSMR"). It should be read in conjunction with FSMR, the relevant Rulebooks of the Financial Services Regulatory Authority ("FSRA"), the FSRA's Guidance & Policies Manual, its 'Guidance — Regulation of Initial Coin/Token Offerings (ICOs) and Crypto Assets under the FSMR' ("ICO Guidance"),1 its 'Guidance — Regulation of Crypto Asset Activities in ADGM' ("OCAB Guidance")2 and its 'Guidance — Regulatory Framework for Private Financing Platforms'.3
2) This Guidance is applicable to entities considering the use of, or using, 'Digital Securities' within ADGM, including activities undertaken by Recognised Investment Exchanges (RIEs), Multilateral Trading Facilities (MTFs), Issuers, Reporting Entities, entities undertaking the Regulated Activity of Operating a Crypto Asset Business ('OCAB', and for the purposes of this Guidance each such licence holder being an 'OCAB Holder'), and entities Providing Custody or Operating a Private Financing Platform ('PFP'), amongst others. The Guidance clarifies the use of Digital Securities within ADGM for both primary market and secondary market contexts. Readers seeking clarity on the licensing requirements for OCAB activities should refer to the OCAB Guidance.
3) For the purposes of this Guidance, 'Digital Securities' are defined are types of digital assets that possess the features and characteristics of a Security (as defined in Schedule 1 — Part 3 of Specified Investments of FSMR).4 Digital Securities also include 'tokenised' offerings of Securities.
4) This Guidance is separated into distinct chapters and is not necessarily best read from front to back. This Guidance may be most useful to a reader who needs to understand a specific aspect of FSRA policy in relation to Digital Securities, and who may therefore wish to better understand FSRA's regulatory treatment in the context of the reader's individual circumstances. Examples of such specific aspects could include (but are not limited to):
a) a potential Issuer seeking to make an Offer of Digital Securities into ADGM;
b) Issuers/Reporting Entities seeking to have Digital Securities admitted to the Official List of Securities;
c) a Crypto Asset Exchange wanting to become a Digital Securities trading venue, whether that be a RIE (refer to paragraphs 70–74) or MTF (refer to paragraphs 64–69);
d) a 'conventional' RIE or MTF wanting to operate a Digital Securities trading venue (refer to paragraphs 41–44 for RIEs and paragraphs 45–48 for MTFs);
e) an entity, including a Crypto Asset Custodian, seeking to provide Digital Settlement Facility services (refer to paragraphs 55–60);
f) a 'conventional' intermediary, such as a broker, custodian, advisor, fund manager or asset manager, seeking to provide its services in relation to Digital Securities (refer to paragraphs 90–92); or
g) an Operator of a PFP seeking to market Digital Securities on its electronic platform (refer to paragraphs 95–98).
5) Except as otherwise set out, when interpreting (and demonstrating compliance with) the Rules discussed in this Guidance, readers are to interpret the Rules referenced in this Guidance (for example, in relation to the MIR, MKT, COBS, GEN and AML Rulebooks) in the way those Rules are written. Where this Guidance cross refers to the OCAB Guidance, it is the FSRA'S general expectation that readers apply those relevant aspects of the OCAB Guidance in the context of Digital Securities, with such changes in terminology being read (and understood) as required.
6) This Guidance is not an exhaustive source of the FSRA's policy on the exercise of its regulatory functions and powers. The FSRA is not bound by the requirements set out in this Guidance and may:
a) impose additional requirements to address any specific risks posed by Digital Securities; and/or
b) waive or modify any of the Rules relevant to Digital Securities, at its discretion, where appropriate.
7) Unless otherwise defined or the context otherwise requires, the terms contained in this Guidance have the same meaning as defined in FSMR and the FSRA Glossary Rulebook ("GLO").
8) For more details on the process for:
a) conducting Offers of Securities, in or from ADGM, please contact the FSRA at MIP@adgm.com;
b) recognition as a RIE and/or Recognised Clearing House (RCH), authorisation as an MTF or authorisation as an entity Providing Custody for services as a Digital Settlement Facility5 ("DSF"), please contact the FSRA at MIP@adgm.com; or
c) authorisation as an intermediary conducting other Digital Securities-based activities, please contact the FSRA at firstname.lastname@example.org.