The Abu Dhabi Global Market (ADGM), through its Financial Services Regulatory Authority (FSRA), has published Consultation Paper No. 10 of 2025, proposing a detailed framework for the staking of virtual assets (VAs). The initiative reflects ADGM’s commitment to enhancing regulatory clarity in one of the most rapidly developing areas of the digital asset ecosystem. The consultation is open until November 17, 2025, providing stakeholders an opportunity to engage in shaping the future of staking activities within the jurisdiction.

Rationale Behind the Proposal

Staking has emerged as a cornerstone of blockchain innovation, offering opportunities for yield generation, network security, and liquidity creation. Yet, it also brings risks related to custody, investor protection, and market integrity. The FSRA acknowledges that global regulatory responses remain fragmented. Through this paper, ADGM seeks to create a structured, transparent, and risk-conscious regime that supports market growth while protecting participants.

Who Can Provide Staking Services

The proposed framework restricts staking activities to entities already holding licences within ADGM:

• Virtual Asset Custodians (VA Custodians): Permitted to provide staking services strictly on client instruction. Any discretionary authority to stake would require an additional asset management licence.

• Virtual Asset Asset Managers (VA Asset Managers): Permitted to stake client assets on either a discretionary or instructed basis.

This approach ensures that only entities with established compliance, governance, and operational oversight can handle client assets in staking arrangements.

Assets Eligible for Staking

The framework confines staking to Accepted Virtual Assets (AVAs). These are tokens that the FSRA has already assessed against its criteria for market integrity, technical robustness, and consumer protection. This restriction is designed to minimise systemic risks by ensuring only vetted assets are staked.

Scope of Regulated vs Non-Regulated Activities

The consultation carefully distinguishes between activities that fall within the scope of regulation and those that do not:

• Solo Staking: Unregulated, as individuals operate on their own account without intermediaries.

• Staking-as-a-Service: Exempt from regulation if providers are purely technical facilitators without custody or control of client assets.

• Other Yield-Generating Activities: Practices often confused with staking, such as liquidity mining and yield farming, are explicitly excluded from this framework and may be addressed separately in the future.

• Liquid Staking Tokens (LSTs): Currently excluded from the regime, though the FSRA acknowledges their growing relevance and may consider regulation at a later stage.

Compliance and Risk Management Requirements

Entities engaging in staking on behalf of clients will face a number of obligations:

• FSRA Notification: A licensed entity must notify the FSRA in writing and obtain a written non-objection prior to staking client assets.

• Due Diligence: Entities must conduct thorough due diligence on staking providers, including validators and protocols. Where automated mechanisms are involved, additional scrutiny of smart contracts and technical safeguards is required.

• Client Agreements: Written agreements must outline responsibilities, risks, and terms of the staking arrangement.

• Incident Reporting: Custodians and asset managers must report any operational or security incidents to the FSRA without delay.

• Transparency: Staked assets must be clearly identified in client statements, with reporting obligations to ensure clarity around returns, risks, and custody.

Treatment of Slashing and Safeguards

The FSRA recognises the risks of slashing (penalties imposed for validator misbehaviour or downtime). While insurance or compensation mechanisms are not mandated under this proposal, the regulator signals that evolving international practices may influence future requirements. For now, firms must ensure clients are made aware of slashing risks and how they are mitigated in practice.

International Alignment and Market Implications

The FSRA’s approach reflects a growing global trend: moving beyond broad definitions of “virtual asset services” to tailored frameworks that address specific activities such as custody, asset management, and staking. By adopting this nuanced regime, ADGM positions itself as one of the first major jurisdictions to formally regulate staking in a manner aligned with international standards while still providing flexibility for innovation.

For the market, this framework is expected to:

• Increase confidence among institutional investors seeking to participate in staking.

• Create a level playing field where regulated entities can differentiate themselves from unregulated operators.

• Support Abu Dhabi’s ambition to be a leading hub for digital assets by embedding strong governance within emerging financial technologies.

Key Takeaway

The FSRA’s proposed staking regime demonstrates a forward-looking balance: enabling innovation in blockchain-based finance while embedding regulatory discipline. For participants in the virtual asset ecosystem, the message is clear—staking in ADGM will be open, but only under structures that prioritise investor protection, operational integrity, and compliance oversight.

Stakeholders are encouraged to submit feedback before the November 17 deadline, as the final framework will likely set a benchmark for how regulators across the region, and possibly globally, approach the complex and fast-evolving world of virtual asset staking.