ADGM Opens Crypto Mining Path, But Client Assets Change the Rules
Under the guidance, crypto mining falls under the Registration Authority’s commercial licensing regime. Businesses must obtain a license listing crypto mining under activity code 7230 before operating. The approach covers proof-of-work, proof-of-stake and future consensus mechanisms when firms conduct mining or validation for their own accounts.
For miners, the license requirement follows the commercial activity rather than the consensus mechanism. Both proof-of-work (PoW) miners and proof-of-stake (PoS) validators need a commercial license when operating as businesses within or from ADGM. Mining or validating solely for the company’s account does not itself constitute a regulated financial service.
However, handling client assets can change regulatory requirements. Businesses that hold, control, or manage third-party digital assets for staking or validation may also need permission from the Financial Services Regulatory Authority (FSRA).
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Pooled staking and custodial delegation may fall into this category. Holding clients’ assets may constitute custody, while selecting staking protocols or managing validator keys for clients may constitute asset management.
These services may therefore require extra Financial Services Regulatory Authority (FSRA) approval. Technical infrastructure services do not currently constitute a regulated activity if the provider never takes possession or control of client assets.
Applicants should therefore assess their proposed activities before applying. Where both regimes apply, companies must seek the required approvals separately and explain how they keep their commercial and regulated activities distinct.
Wallet Disclosures and Overseas Checks Put Miners Under Review
Alongside licensing, the guidance sets expectations for transparency. Companies must maintain current records of their corporate structure, management, and ultimate beneficial ownership, and notify the Registration Authority of material changes.
Operators are also expected to disclose wallet and smart contract addresses used to receive or manage mining and validation rewards. These disclosures will remain private, with access limited to authorized staff.
Applicants, particularly those planning larger operations, may need to submit equipment specifications and site details. The authority may also request plans covering cybersecurity, business continuity and recovery from operational or technical disruptions.
Supervision will reflect each operation’s size and risks. The authority may review reports, conduct inspections or request independent verification, while breaches can lead to penalties, license suspension or revocation.
Oversight also extends to ADGM-based mining headquarters that manage overseas operations. These businesses may need to disclose foreign locations, operating capacity, and management structures, as well as report major compliance breaches or material regulatory actions abroad.
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Related: Arkansas Defends Crypto Mining Law as Judge Questions Injunction