17.1. [intentionally omitted]

This chapter applies to an Authorised Person engaged in the activity of Operating a Digital Asset Business.

Guidance

The following activities do not constitute Operating a Digital AssetBusiness:

trading of Digital Assets for the Person’s own investment purpose;

the issuance of Digital Assets by a Person and their administration (including sale, redemption);

any other activity or arrangement that is deemed by the AFSA to not constitute Operating a Digital Asset Business, where necessary and appropriate in order for the AFSA to pursue its objectives.

17.2. [intentionally omitted]

In addition to all requirements applicable to Authorised Persons in these rules, GEN, and AML, an Authorised Person carrying on the Market Activity of Operating a Digital Asset Trading Facility must comply with the applicable requirements set out in the AMI, unless the requirements in this chapter expressly provide otherwise.

17.3. [intentionally omitted]

An Authorised Person Operating a Digital Asset Trading Facility may grant admission of Digital Assets to trading only where it is satisfied that such admission is in accordance with the AMI and an Authorised Digital Asset Trading Facility’s Admission to Trading Rules.

An Authorised Person Operating a Digital Asset Trading Facility must not permit trading of Digital Assets on its facilities unless those Digital Assets are admitted to, and not suspended from, trading by the Authorised Person Operating a Digital Asset Trading Facility pursuant to Chapter 6 of AMI.

17.4. [intentionally omitted]

Prior to entering into an initial transaction for, on behalf of, or with a Client, an Authorised Person Operating a Digital Asset Business shall disclose in a clear, fair and not misleading manner:

1. (a)all terms, conditions and risks relating to the Digital Assets that have been admitted to trading and/or is the subject of the transaction;
2. (b)all material risks associated with its products, services and activities; and
3. (c)all details on the amount and the purpose of any premiums, fees, charges or taxes payable by the Client, whether or not these are payable to the Operating a Digital Asset Business.

17.5. [intentionally omitted]

The risks to be disclosed pursuant to COB 17.4. include, but are not limited to, the following:

1. (a)Digital Assets not being legal tender or backed by a government;
2. (b)the value, or process for valuation, of Digital Assets, including the risk of a Digital Assets having no value;
3. (c)the volatility and unpredictability of the price of Digital Assets relative to Fiat Currencies;
4. (d)that trading in Digital Assets is susceptible to irrational market forces;
5. (e)that the nature of Digital Assets may lead to an increased risk of Financial Crime;
6. (f)that the nature of Digital Assets may lead to an increased risk of cyber-attack;
7. (g)there being limited or, in some cases, no mechanism for the recovery of lost or stolen Digital Assets;
8. (h)the risks of Digital Assets with regard to anonymity, irreversibility of transactions, accidental transactions, transaction recording, and settlement;
9. (i)that there is no assurance that a Person who accepts a Digital Asset as payment today will continue to do so in the future;
10. (j)that the nature of Digital Assets means that technological difficulties experienced by the Authorised Person may prevent the access or use of a Client’s Digital Assets;
11. (k)any links to Digital Assets related activity outside the AIFC, which may be unregulated or subject to limited regulation; and
12. (l)any regulatory changes or actions by the AFSA or Non-AIFC Regulator that may adversely affect the use, transfer, exchange, and value of a Digital Asset.
13.  

17.6. [intentionally omitted]

An Authorised Person Operating a Digital Asset Business shall establish and maintain written policies and procedures to fairly and timely resolve complaints made against it or other parties (including members).

An Authorised Person Operating a Digital Asset Business must provide, in a clear and conspicuous manner: on its website or websites; in all physical locations; and in any other location as the AFSA may prescribe, the following disclosures:

1. (a)the mailing address, email address, and telephone number for the receipt of complaints;
2. (b)a statement that the complainant may also bring his or her complaint to the attention of the AFSA;
3. (c)the AFSA’s mailing address, website, and telephone number; and
4. (d)such other information as the AFSA may require.

An Authorised Person Operating a Digital Asset Business shall report to the AFSA any change in its complaint policies or procedures within ten days.

An Authorised Person Operating a Digital Asset Business must maintain a record of any complaint made against it or other parties (including members) for a minimum period of six years from the date of receipt of the complaint.

17.7. [intentionally omitted]

An Authorised Person Operating a Digital Asset Business shall report to the AFSA details of transactions in Digital Assets traded on its facility which are executed, or reported, through its systems.

The AFSA may, by written notice or Guidance, specify:

1. (a)the information to be included in reports made under the preceding paragraph; and
2. (b)the manner in which such reports are to be made.
3.  

17.8. [intentionally omitted]

The AFSA may prohibit an Authorised Person Operating a Digital Asset Business from:

1. (a)entering into certain specified transactions or types of transactions; or
2. (b)outsourcing any of its functions or activities to a third party.

The AFSA may, by written notice or guidance, set fees payable by an Authorised Person Operating a Digital Asset Business to the AFSA on certain specified transactions or types of transactions.