Reed Smith Client Alerts

Key takeaways

  • ADGM rules provide framework for establishing and operating DLT foundations.
  • The rules cover a DLT foundation’s entire life cycle and its officers’ rights and duties.
  • The rules put ADGM at the forefront of regulating DAOs and reinforce the region as a crypto hub.

In April 2023, we wrote about the Abu Dhabi Global Market’s (ADGM) consultation paper on the creation of specialised foundations for decentralised autonomous organisations (DAOs).

On 2 November 2023, the ADGM formally released the Distributed Ledger Technology Foundations Regulations 2023 (DLT Regulations), which provide a legal framework for the establishment and operation of distributed ledger technology (DLT) foundations.

A DLT foundation is a legal entity that can hold and manage digital assets for a specified purpose, such as supporting a DLT network or protocol.

Registering a DLT foundation

To register a DLT foundation, the founder must submit a charter and other documents to the registrar of DLT foundations (Registrar), and pay a fee. The charter must specify the objects, activities, governance, and beneficiaries of the DLT foundation, as well as the rights and obligations of the tokenholders. Tokenholders are persons who hold or control tokens issued by the DLT foundation, and who have certain voting and information rights.

A DLT foundation must have a minimum initial asset value of US$ 50,000, and may receive additional endowments from the founder or other sources. The assets of the DLT foundation are separate from those of the founder, the councillors, the guardian, and the beneficiaries, and are not subject to foreign laws that may affect their ownership or transfer.