On 10 June 2025 the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) released the third major revision of its digital-asset rule-set. The document — often called Digital-Asset Framework 3.0 — updates ADGM’s existing “Regulation of Digital Securities, Crypto-Assets and Commodities” and introduces three headline changes:

• Base capital for broker-dealers is cut to USD 250 000 (down from USD 500 000), making entry cheaper for new trading desks.
• “Privacy-enhanced” tokens are restricted; exchanges may list them only with FSRA approval and stringent on-chain analytics.
• A new tier of “Category B Custodian” is created, offering lighter audit and reporting obligations for firms that hold client assets up to a capped value.

The consultation process ran from February to April 2025; the final text appears in FSRA Guidance — Supplement No. 5 to the Financial Services Rulebook. Existing licence-holders have six months to file a transition plan or face licence variation.

Why ADGM is making these changes

Abu Dhabi’s regulators have always positioned the island as a prudently regulated alternative to the more marketing-driven approach of Dubai’s Virtual Assets Regulatory Authority (VARA). By lowering capital thresholds while tightening controls around anonymity-focused coins, the FSRA intends to:

• De-risk the market without driving start-ups to offshore jurisdictions;
• Keep fee structures competitive with VARA’s MVP licence in Dubai;
• Align with FATF guidance that discourages privacy tokens unless strong tracing tools are in place.

The Oxford-HKU Digital Assets Programme calls the move “pragmatic recalibration” that should preserve Abu Dhabi’s appeal to institutional desks while reassuring correspondent banks.

Key concepts in Framework 3.0

Base capital sets the minimum paid-up equity a broker or dealer must hold. At USD 250 k, ADGM now sits between Dubai’s USD 136 k (Tier 3 VARA) and Singapore’s SGD 250 k (for standard payment tokens).

Privacy tokens are coins that use zero-knowledge proofs or coin-joins to mask wallet flows (for example, Monero or some Z-cash pools). Under the new rules, they cannot be traded in ADGM unless the exchange can demonstrate “equivalent transparency” through blockchain forensics.

Category B Custodian is a brand-new licence for firms that safeguard a limited volume of client assets. They must still maintain cold-wallet segregation and daily reconciliations but may file quarterly — not monthly — reports and need only an annual, not semi-annual, SOC-1 audit.

Practical impact for existing market players

Firms already operating under the old framework must submit a transition memorandum by 11 December 2025. The FSRA will then issue either a simple acknowledgement or a notice of licence variation. Omission or delay may prompt a supervisory review.

Exchanges that list privacy-enhanced coins must deliver a token assessment report detailing chain-analysis tooling, delisting procedures and travel-rule compliance. Broker-dealers can, from the effective date, apply to reduce locked-in capital, freeing equity for margin liquidity. Custodians holding less than USD 50 million for retail clients may move down to Category B and benefit from lower supervisory fees.

Common stumbling blocks the FSRA identified during consultation

Several respondents underestimated the documentation required to obtain privacy-token clearance; many also ignored the need to re-draft client-asset disclosure statements when shifting to Category B custody. Another frequent error was treating the capital-reduction request as automatic: the FSRA insists on a revised ICAAP (Internal Capital Adequacy Assessment Process) before sign-off.

Where professional support makes a difference

Digital-asset regulation in the UAE now spans three layers — VARA in Dubai, the Securities and Commodities Authority for mainland firms, and the FSRA for ADGM. Navigating this patchwork requires:

• A gap assessment between existing policies and the new Supplement No. 5.
• Revised AML/KYC playbooks that address privacy-token analytics.
• Updated legal opinions on custodian bankruptcy-remoteness under Category B.
• A capital-planning memo that ties the lower equity requirement to concrete liquidity-stress tests.

ERG’s Gulf FinTech & Regulatory practice assists licence-holders with transition filings, board-level capital memos, policy upgrades, and ongoing FSRA engagement. Our multidisciplinary team maps ADGM requirements to VARA and SCA frameworks, ensuring firms can scale across the UAE without duplicating work.

Looking forward

By early 2026 the FSRA expects every digital-asset exchange, broker and custodian in ADGM to operate under the 3.0 regime. Early movers can unlock capital efficiencies and establish a compliance stance that remains credible with international correspondent banks — a key differentiator as the Gulf competes for institutional crypto talent.

For a tailored transition roadmap or a first-time licence strategy under Digital-Asset Framework 3.0, contact ERG’s regulatory specialists.