INTRODUCTION

          Why are we issuing this Feedback Statement?

        1.    This Feedback Statement has been issued following the public consultation conducted on the proposed amendments to the AIFC Crowdfunding Framework. It sets out the outcomes of the consultation process and is intended to enhance transparency and regulatory clarity, in particular by:

• ·       summarising the key themes and views expressed by stakeholders during
  the consultation;
• ·       explaining how the final amendments differ from the proposals consulted on;
• ·       outlining the main considerations that informed the final policy decisions; and
• ·       clarifying the rationale for not incorporating certain comments or suggestions.

           Who should read this Feedback Statement?

       2.    This Feedback Statement is particularly relevant to stakeholders who participated in the consultation process, as well as to current and potential market participants engaged in crowdfunding sector and other interested stakeholders.

 

            Terminology

3. Defined terms have the initial letter of the word capitalised, or of each word in a phrase. Definitions are set out in AIFC Glossary. Unless the context otherwise requires, where capitalisation of the initial letter is not used, the expression has its natural meaning. 

PART I – BACKGROUND

1.    In 2019, AFSA introduced the first dedicated regulatory framework in the Central Asian region for loan- and investment-based crowdfunding platforms. Since its introduction, the crowdfunding market has evolved, with increasing platform activity and wider use as an alternative source of financing. Alongside these developments, AFSA has sought to ensure that the regulatory framework continues to remain efficient, proportionate, and aligned with market practices.

2.    In particular, the continued growth of the crowdfunding sector has brought greater visibility to certain regulatory and operational challenges affecting investor confidence. Feedback from platform users has highlighted concerns relating to transparency, the quality of disclosures, and the alignment of platform conduct with investor protection standards. In response, the AFSA developed a comprehensive set of amendments and submitted them to public consultation for discussion with the market prior to finalisation.

3.    In July 2025, the AFSA published Consultation Paper AFSA-P-CE-2025-0003, setting out the proposed amendments to the AIFC Crowdfunding Framework. The public consultation was conducted from 21 July to 15 September 2025.

4.    Following the conclusion of the public consultation, the AFSA considered the comments and suggestions received. In December 2025, the AFSA Board of Directors reviewed the consultation outcomes and approved the amendments to the AIFC Crowdfunding Framework.

5.    The AIFC Authorised Market Institution Rules, AIFC Conduct of Business Rule and AIFC General Rules with the relevant amendments are available on
the AIFC and AFSA websites.

6.    The amendments will enter into force on 1 January 2026 with a 6-month transition period for existing Authorised Crowdfunding Platforms.

PART II – OUTCOMES OF PUBLIC CONSULTATION

1.    The consultation on the crowdfunding framework received extensive and detailed feedback. The proposed amendments aimed at enhancing investor protection and market transparency in the AIFC crowdfunding sector were generally well received by market participants, who expressed overall support for the proposed approach. Respondents broadly acknowledge the need for enhanced transparency, clearer default reporting, and more proportionate investor protection measures.

2.    AFSA assessed all inputs, taking into account practical application, potential risks, and the underlying regulatory objectives. Where appropriate, feedback was incorporated into the final amendments; in other cases, proposals were not taken forward where the justification provided was not considered sufficient, fell outside the scope of the current framework, or are more appropriately considered as part of future policy work.

3.    Of the 10 proposals consulted on, 5 were implemented as originally proposed in the Consultation Paper. Strong support was expressed for proposals on client classification and enhancements to risk disclosure and investor education requirements. Proposals on disclosure of creditworthiness grading or rating results and the introduction of an annual lending and investment limit for retail clients were also implemented as proposed, notwithstanding comments raised during the consultation, as AFSA considered the original approach to remain appropriate.

4.    Of the remaining 5 proposals, 1 proposal relating to suitability assessment was withdrawn, while the other 4 proposals concerning strengthened due diligence, the treatment and disclosure of defaults and overdue payments, restrictions on new lending proposals, and the participation of sole proprietors were refined following stakeholder feedback. 1 new proposal on loan restructuring was also developed. These refinements were intended to improve practical application and ensure operational feasibility, while maintaining the regulatory objective of strengthening investor protection.

5.    In addition, the effective date of the amendments for existing Authorised Crowdfunding Platforms was revised to provide adequate time to make necessary adjustments, align internal processes, and prepare for compliance with the new requirements.

Suitability assessment for Retail Clients

6.    The AFSA consulted on the introduction of a requirement to assess the suitability of Retail Clients before permitting them to invest through a crowdfunding platform. While limited support for the proposal was expressed, the majority of respondents raised concerns that the proposal would involve platforms in activities typically associated with investment advice, potentially creating legal uncertainty and disproportionate compliance burdens. Respondents also noted that Retail Clients are already subject to risk disclosures and investor education measures, and that introducing a formal suitability obligation could adversely affect onboarding processes.

7.    When developing the proposal, the suitability assessment requirement was intended as a proportionate investor protection safeguard and was broadly consistent with international approaches that rely on knowledge or appropriateness assessments rather than investment advice. However, the AFSA also acknowledged concerns regarding the practical application of such a requirement, including uncertainty as to how platforms would be expected to proceed where a Retail Client does not meet the assessment criteria, particularly in light of existing investment limits and risk acknowledgement requirements.

8.    Having considered the feedback received, the AFSA decided not to proceed with the introduction of a mandatory suitability assessment for Retail Clients at this stage. Instead, the AFSA will rely on the strengthened risk disclosure framework, enhanced risk acknowledgement processes, investor education tools, and additional investment limits introduced through the amendments to achieve the intended investor protection outcomes, while preserving proportionality within the crowdfunding framework.

Strengthened due diligence of Issuers and Borrowers

Clarification of the requirement to verify the Borrower’s financial strength

9.    Within the enhancement of requirements for due diligence of Borrowers or Issuers, the AFSA proposed introducing an obligation to verify their financial strength based on a review of financial statements. Respondents argued that many SMEs, particularly sole proprietors, lack formal financial statements and suggested allowing the use of alternative evidence such as management accounts, tax filings, or bank records. It was also noted that the term “financial strength” may be open to subjective interpretation. Accordingly, the proposal was refined to focus on the assessment of the financial situation, taking into account financial statements where applicable or other relevant financial information.

Removal of proposed requirement to verify the level of commitment and flight risk

10. AFSA also proposed introducing a new requirement within the due diligence of Borrowers or Issuers to verify the level of their commitment and that of its Directors, officers and Controllers to the business, including how much capital they have provided and any potential flight risk. However, respondents argued that similar to “financial strength”, the “commitment” and assessment of “any potential flight risk” are also open to subjective interpretation and platforms may face practical constraints in assessing such a subjective factor.

11. They also noted that requiring assessment of shareholders’ capital contributions might be inappropriate, since many SMEs have only nominal charter capital that does not reflect real commitment or viability. One of the respondents also requested clarification on who should sign commitment-related documents (although no specific requirement on this matter was proposed), noting practical challenges in identifying appropriate signatories. It was emphasised that such commitments should be signed exclusively by the ultimate beneficial owner (UBO), as the individual bearing primary responsibility for the business.

12. After considering the feedback, the AFSA decided not to proceed with this proposal. Although it was initially intended to be principles-based, providing flexibility for platforms to determine their approach depending on the profile of Borrowers and Issuers, their scale, and the risks involved, it was recognised that assessing “flight risk” would be highly subjective and difficult to implement in practice. Given the absence of clear parameters for such an assessment at this stage, the AFSA considered it premature to introduce this requirement until the scope and methodology can be further developed to provide adequate guidance to platforms.

Clarification on sole proprietors’ participation in crowdfunding

13. AFSA proposed to allow sole proprietors to use services of crowdfunding platforms as Borrowers, contingent upon the AFSA approval. This provision introduces a conditional framework that would expand eligibility beyond the current Body Corporate category while maintaining regulatory oversight through the AFSA's approval process. The proposed change builds on the existing modification previously granted by the AFSA, which permits such participation under specific conditions.

14. Respondents expressed support for the proposal to allow sole proprietors to participate in crowdfunding with AFSA’s permission and noted the importance of broadening access to financing for small businesses. At the same time, it was suggested to clarify that sole proprietors should only be permitted to participate in loan-based crowdfunding. AFSA agreed with this position and clarified in the amendments that sole proprietors may participate only as Borrowers.

15. Respondents also raised concerns regarding the lack of clarity around the proposed permission framework, noting that the absence of defined criteria or processes could lead to inconsistent application. AFSA considered that introducing detailed prescriptive requirements would not be appropriate and instead will allow platforms to apply a risk-based approach, determining relevant requirements proportionate to their scale, business model, and risk profile. At the same time, AFSA may issue further guidance if it observes inconsistent practices, discretionary treatment, or risks to investor protection.

Enhanced framework for defaults, overdue payments and failures

Enhancement of the “default” definition

16. In response to the proposal to treat a loan that is over 90 days past the due date as being in default, a market participant noted that the concept of default should enable lenders and investors to demand early repayment in case of any breach without being constrained by a fixed 90-day delay period. In other words, any violation of the terms of the agreement was proposed to be treated as default, to allow the platform to respond promptly to breaches.

17. The introduction of the concept of default in the framework was intended to clarify that, in the context of loan repayment, the 90-day period functions as a backstop, ensuring a consistent trigger point for enforcement where a loan remains unpaid. However, the framework does not prevent platforms from taking earlier action in response to a breach of payment terms. The 90-day benchmark serves as the point at which platforms are required to enforce a loan in default, ensuring transparency and consistency across the market.

18. Though platforms retain flexibility to demand repayment of overdue payments before the loan is treated as in default, to provide greater clarity and in line with international best practices, the AFSA decided to supplement the 90-day backstop with an additional criterion allowing a loan to be considered in default where the platform has reasonable grounds to believe that full repayment is unlikely, regardless of whether it is less than 90 days past the due date.

Revised information requirements on actual default

19. A number of comments were received on the proposal to expand the disclosure requirements regarding actual default. In particular, concerns were raised regarding the proposed indicator of “the total principal amount of loans in default as a percentage of all outstanding loans on the platform”, which was proposed to provide a point-in-time measure of portfolio quality by comparing current defaulted loans to the current outstanding loan amount. This metric was intended to complement required cumulative default rate by giving investors visibility into the present risk profile to be updated and reported every quarter.

20. However, respondents noted that the proposed approach to calculating default rates may be misleading, as changes in the volume of outstanding loans can distort the ratio. For example, repayments may inflate the default rate even if defaults remain unchanged, while a high volume of new lending may reduce the ratio without any real improvement in loan performance. To address this, market participants suggested retaining default rates based on total loans originated or applying a vintage cohort approach to ensure more consistent and comparable performance data over time.

21. Taking into account the comments received and the risk of potential misinterpretation, AFSA considered that the proposed indicator may not provide a clear view for retail investors. While the vintage cohort approach was also considered, it was assessed as overly complex for periodic disclosure. Accordingly, AFSA decided to exclude this indicator and retain enhanced disclosures on the number and aggregate principal amount of defaulted loans, complemented by the number of loans with overdue payments and clarified guidance on cumulative default rate calculations (“defaulted to date” rather than “current defaults”).

22. In addition, some respondents also noted that the number and amount of defaulted loans may not allow for direct comparison between platforms, but AFSA decided to retain this requirement as proposed considering its value in providing investors with a clearer picture of platform performance. Some respondents also suggested reducing the number of categories used for the disclosure of overdue payments; however, the AFSA decided to maintain the existing categorisation, while introducing refinements to the proposed periods. A more granular categorisation is intended to support a clearer understanding of overdue payment trends and portfolio performance.

Clarification of restriction on new lending proposals

23. The proposal that a platform must not permit a new lending proposal if a Borrower has outstanding loans in default or with overdue payments raised no objections. One respondent expressed support but requested further clarification of the specific requirements. Upon review, the AFSA noted that the provision could be interpreted ambiguously as to whether it refers only to loans on the same platform or also to those held elsewhere.

24. To clarify this, the AFSA decided to specify that the requirement applies to a crowdfunding platform in relation to any loans a Borrower may have, whether obtained through its platform, another Authorised Crowdfunding Platform, or any other financial institution. At the same time, the AFSA also emphasised that the obligation is not merely to comply with the restriction but to take reasonable steps to ensure compliance, recognising that much will depend on the availability and accessibility of relevant data.  

Loan restructuring

25. There was a new proposal from the market to consider prohibiting multiple restructurings that may hide the platform's real default rate from investors. Respondents also suggested that mediation cases resulting in new repayment schedules should be disclosed as restructured loans rather than treated as defaults. These comments highlighted the need for greater transparency around loan restructuring practices.

26. Loan restructuring currently remains governed by contractual arrangements between borrowers, lenders, and the platform, with such processes generally administered by the platform itself. In response to feedback, and notwithstanding existing disclosure requirements on overdue payments and defaults, AFSA considered it appropriate to require disclosure of how an Authorised Crowdfunding Platform approaches and manages loan restructuring.

27. In addition, to support consistent and transparent treatment of restructured loans for disclosure purposes, the AFSA introduced guidance that, for the purpose of default rate calculations restructured  loans in default may only be reclassified once the Borrower has made all scheduled payments on time under the revised terms for a continuous period of three months, and where the platform has reasonable grounds to conclude that the Borrower’s financial difficulty has been resolved and full repayment is likely.

Feedback not incorporated in the final amendments

28. In addition to the proposals reflected in the final amendments, the consultation also gave rise to a number of further suggestions from market participants. AFSA carefully considered these suggestions alongside the regulatory objectives, supervisory experience, and alignment with international practice, but concluded that they should not be incorporated into the final amendments.

Optional creditworthiness grading or rating disclosure risks

29. Market participants expressed concern that mandatory creditworthiness grading or rating disclosure conflicts with their role as neutral market operators and could expose them to legal liability. They suggested that it should remain optional.  However, the AFSA considers it essential that all platforms disclose the methodology used to evaluate creditworthiness, particularly where platforms set their own pricing. This promotes transparency and enables investors to understand how risk is assessed, while AMI 7.3.7(f)(iii) already provides for supplementing disclosure with a clear statement that credit grades should not be construed as investment advice.

Standardised formula for expected default rates

30. The proposal to provide a standardised formula for calculating expected default rates or removing the requirement altogether was submitted during consultation. After review, AFSA concluded that prescribing a single formula would not be feasible, as the calculation is closely linked to each platform's internal credit assessment framework and Borrower profile. Therefore, the guidance is introduced instead clarifying that the expected default rate should be derived from each platform's own creditworthiness assessment framework, allowing flexibility while ensuring transparency.

Revision of new investment limit

31. Market suggested raising the proposed USD 50,000 annual investment cap for Retail Clients to USD 100,000 or replacing it with portfolio-based limits. The AFSA did not support the suggestion as the USD 50,000 limit is calibrated to local economic conditions, provides adequate diversification opportunities at typical deal sizes, while allowing wealthier investors to pursue a professional client pathway. The AFSA also considered the suggested alternatives and concluded that they would not result in materially different caps for retail investors.

Excessive disclosure of historical defaults and overdue payments

32. The proposal to limit disclosure of historical information on each Borrower or Issuer in relation to any overdue payments, defaults or failures to a fixed period (e.g., 24 months) was suggested by the respondents. The AFSA acknowledges the concern and notes that disclosure should be materiality-focused rather than tied to a fixed look-back period. The proposed amendments do not restrict platforms from providing context for exceptional circumstances such as systemic shocks and platforms are allowed to exercise judgment in providing information that is accurate, proportionate, and meaningful to investors.  

Inapplicability of valuation of business requirement

33. Market participants also proposed to remove the proposed business valuation requirement for loan-based crowdfunding. They cautioned that imposing valuation requirements would create unnecessary costs and exclude many SMEs lacking formal valuations. However, the AFSA considers that even a basic valuation contributes to transparency by providing an objective reference point for assessing business viability and scale. The existing due diligence provision allows flexibility through the "as applicable" qualifier, and platforms should provide clear justification where the requirement cannot be reasonably fulfilled in practice.

Enhanced monitoring requirements

34. Stakeholders proposed imposing requirement for platforms to conduct quarterly monitoring of Borrowers' financial activities, including compliance with loan conditions, and publishing the results in investors’ personal accounts. As an example, the respondent noted its dedicated monitoring section where investors can track project performance and material changes.

35. AFSA decided to leave the frequency and format of monitoring to the platform’s discretion, provided that effective systems are in place to ensure transparency and investor protection. In this context and given the obligation to disclose any material changes as soon as practicable, platforms are expected to maintain robust monitoring arrangements. The monitoring approach described by the respondent illustrates how this may be implemented in practice.

INTRODUCTION

       Why are we issuing this Feedback Statement?

      1.    This Feedback Statement has been issued following the public consultation conducted on the proposed amendments to the AIFC Digital Assets Framework. It sets out the outcomes of the consultation process and is intended to enhance transparency and regulatory clarity, in particular by:

•      summarising the key themes and views expressed by stakeholders during
  the consultation;
•      explaining how the final amendments differ from the proposals consulted on;
•     outlining the main considerations that informed the final policy decisions; and
•       clarifying the rationale for not incorporating certain comments or suggestions.

 

      Who should read this Feedback Statement?

     2.    This Feedback Statement is particularly relevant to stakeholders who participated in the consultation process, as well as to current and potential market participants engaged in activities involving Digital Assets and other interested stakeholders.

 

      Terminology

     3.    Defined terms have the initial letter of the word capitalised, or of each word in a phrase. Definitions are set out in AIFC Glossary. Unless the context otherwise requires, where capitalisation of the initial letter is not used, the expression has its natural meaning.

PART I – BACKGROUND

1.    The AIFC Rules on Digital Asset Activities (DAA) came into effect on 1 January 2024. Since then, the AFSA has observed their application in practice and  identified specific areas requiring clarification or enhancement, which led to the proposal of amendments to the AIFC Digital Assets Framework for public consultation.

2.    A key area of focus was the regulatory treatment of firms whose business models do not involve holding or controlling Digital Assets or the use of distributed ledger technology (DLT). The review also covered other areas, including capital requirements, membership scope, and Digital Asset admission.

3.    In developing the proposed amendments, the AFSA actively engaged with market participants prior public consultation to gather input on areas where further refinement may be required. As the feedback received was limited,  we proceeded with a core set of proposals and submitted them to public consultation to facilitate broader stakeholder engagement on any further matters that may be raised by the market.

4.    In July 2025, the AFSA published Consultation Paper AFSA-P-CE-2025-0002, setting out the proposed amendments to the AIFC Digital Assets Framework. The public consultation was conducted from 21 July to 15 September 2025.

5.    Following the conclusion of the public consultation, the AFSA considered the comments and suggestions received. In December 2025, the AFSA Board of Directors reviewed the consultation outcomes and approved the amendments to the AIFC Digital Assets Framework.

6.    The AIFC Rules on Digital Asset Activities and the AIFC Glossary with
the relevant amendments are available on the AIFC and AFSA websites.

The amendments will enter into force on 1 January 2026.

PART II – OUTCOMES OF PUBLIC CONSULTATION

1.    The consultation outcomes confirmed that the proposed amendments addressed relevant and practical regulatory issues, with respondents acknowledging the need for greater clarity and proportionality of the framework. As a result, 2 of the 4 proposals were implemented as originally proposed, including the revised capital requirement for Digital Asset Trading Facility (DATF) Operators and the expansion of DATF membership criteria.

2.    The remaining 2 proposals, relating to the regulatory treatment of Regulated Activities involving Digital Assets and the notification process for the admission of Digital Assets, were refined to take into account stakeholder comments. These refinements were intended to enhance practical application, while maintaining the overall regulatory objectives of the amendments.

3.    In addition, the consultation identified a number of practical and technical issues, which informed further targeted amendments, including refinements to the operation of Digital Asset Trading Facilities, client and membership arrangements, and certain notification and review processes, aimed at improving regulatory clarity, operational consistency, and the practical application of the framework.

4.    Certain suggestions raised during the consultation were not taken forward, as they lacked sufficient justification, fell outside the scope of the DAA, or were considered more appropriate for future policy development or supervisory engagement. The consultation process provided useful input and enhanced the AFSA’s insight into market perspectives relevant to the continuous refinement of the AIFC Digital Assets Framework.

Clarification of criteria for full-scope Digital Asset Service Providers (DASPs)

5.    The revised approach proposed by AFSA to the regulatory treatment of Regulated Activities involving Digital Assets confirmed that all firms conducting activities in relation to Digital Assets should be treated as DASPs, consistent with the DAA Rules, while clarifying that certain governance and technology-related requirements would not apply to firms that do not hold or control Digital Assets or use DLT. During the consultation period, feedback indicated that further clarification of the meaning of “hold or control” may be required.

6.    The AFSA reviewed international regulatory practices to assess how the concepts of holding and controlling Digital Assets are addressed in other jurisdictions. This review showed that, in many cases, these concepts are not expressly defined in regulatory instruments or are addressed only at a high level. The AFSA therefore considered different regulatory approaches in certain jurisdictions and drew on practical regulatory experience to identify an approach that provides greater clarity and relevance for DASPs.

7.    On this basis, the AFSA amended the rules to clarify that a DASP is regarded as holding or controlling a Digital Asset on behalf of, or for, Clients if:

                        (i)         the Digital Asset is directly held by the DASP in an account or Digital wallet; or

                       (ii)         the Digital Asset is held in an account or Digital wallet in the DASP’s name; or

                     (iii)         the Digital Asset is held by a legal entity, or in an account or Digital wallet in the name of the legal entity that is controlled by the DASP; or

                     (iv)         the private key or seed phrase of the Digital wallet is held or controlled by the DASP.

Revision of the DASP’s Board composition requirement

8.    While conducting research to clarify the criteria for full-scope DASPs, AFSA also identified the need to reconsider the requirement for at least one-third of the Board of Directors to comprise Independent Directors. AFSA’s review of international best practices did not identify a consistent requirement of this nature applied specifically to DASPs, most regulators adopt a principle-based approach, requiring Boards to maintain adequate governance arrangements and an appropriate degree of independence to ensure effective oversight without prescribing fixed ratios.

9.    Recognising that existing quantitative threshold for Independent Directors may create unnecessary barriers for DASPs without proportionately enhancing governance outcomes, AFSA has revised the DAA Rules and removed this requirement from the DAA 3.3.2 and DAA 4.4. However, this requirement remains applicable to DATF Operators, as such entities operate trading facilities that warrant a higher level of governance independence and oversight.

Revision of Guidance on post-admission notification 

10. AFSA proposed replacing the prior notification requirement with a post-admission notification requirement under DAA 2.8.2 and, in connection with this change, introduced guidance setting out the information to be included in such post-admission notifications. The proposed guidance required notifications to include details of the internal assessment conducted, confirmation of compliance with DAA 2.8, and identification of any material risks associated with the Digital Asset.

11. We received a comment noting that the DATF Operator’s obligation under DAA 2.8 and related admission rules is to assess the Digital Asset’s compliance with the regulatory admission criteria, rather than to conduct an investment risk assessment. Therefore, to avoid an overly broad interpretation, the reference to “identification of any material risks associated with the Digital Asset” was removed, leaving only the requirements for assessment and confirmation of compliance with DAA 2.8.

Clients of DATF Operators

12. During the public consultation, a respondent suggested clarifying that clients of Members should not be treated as Clients of the DATF Operator, as, under DAA 2.11.1, Members of a DATF Operator and their clients are currently treated as Clients of the DATF Operator, whereas the operational framework of the DATF implies that contractual and regulatory obligations should apply only to users that engage directly with the DATF.

13. AFSA agrees that clients of Members should not be treated as Clients of the DATF Operator, while Members themselves are considered Clients. This approach reflects international practice and ensures coherence within the AIFC framework, without affecting the DATF Operator’s overarching obligations in relation to Market Abuse and Financial Crime. AFSA made corresponding amendments the use of the terms “Clients”, “Members” and “clients” to ensure consistency and avoid regulatory gaps.

Business Rules, Membership Rules and Admission to Trading Rules

14. DAA requires a DATF Operator to maintain Business Rules, Admission to Trading Rules, and Membership Rules. During the consultation, market participants suggested consolidating these into a single set of Business Rules to streamline regulatory obligations. AFSA agrees with this approach and, consistent with the AIFC framework for Authorised Market Institutions, has introduced amendments so that Membership and Admission to Trading Rules form part of the Business Rules governing relations between the DATF Operator and market participants.

Publication of Key Features Document

15. Under DAA 2.8.4, a DATF Operator may admit a Digital Asset to trading only if a key features document is published. While market participants suggested removing this requirement given the availability of information in the Digital Asset’s white paper, AFSA considers that the key features document plays an important disclosure role. Accordingly, the requirement is retained, with guidance clarified to allow incorporation of the white paper by reference, subject to the applicable purpose and information requirements.

16. In addition, market participants proposed removing the requirement to publish a statement where certain information required under the key features document is not known, citing disproportionate technical and compliance burdens. Following a jurisdictional review, AFSA concluded that this requirement was overly prescriptive and has therefore removed it from the final rule, while maintaining the obligation for DATF Operators to take reasonable steps to determine the required information.

Review of compliance

17. The DATF Operator is required to conduct semi-annual reviews to assess whether Digital Assets admitted to trading continue to comply with the Admission to Trading Rules. During the consultation, a risk-based approach to determining the frequency of such reviews was suggested, and AFSA’s review of comparable regulatory frameworks indicated that reassessment frequencies are commonly determined flexibly based on risk.

18. However, taking into account supervisory experience and the current stage of market development, AFSA considers that a semi-annual review remains necessary to ensure effective oversight and market integrity. Accordingly, the semi-annual review requirement is retained, while allowing for adjustments to the review frequency, subject to AFSA’s approval, where a DATF Operator can demonstrate the application of adequate risk-based monitoring procedures.

Admission of Digital Asset Derivatives 

19. In accordance with DAA 2.8.8, a DATF Operator may admit Digital Asset Derivatives to trading subject to AFSA’s approval. A respondent sought clarification on whether additional approval would be required for each individual derivative once a class of Digital Asset Derivatives had already been approved. To clarify this point, AFSA amended the rule to confirm that once a class of Digital Asset Derivatives has been approved, individual Digital Assets within that class do not require separate approvals. This amendment supports regulatory efficiency while maintaining appropriate oversight.

Publication of decisions   

20. DATF Operator is required to notify AFSA in advance and publish a public notice on its website whenever a Digital Asset is re-admitted, suspended, or removed from trading. A respondent suggested removing the obligation to notify AFSA in advance entirely, arguing that DATFs should have the discretion to determine conditions for suspending trading in crypto assets. However, based on the jurisdictional review and supervisory practice, and consistent with the AMI Rules, AFSA amended the provision by replacing the requirement to notify “in advance” with an obligation to notify “immediately” to ensure timely disclosure.

Calculation of an individual client’s net assets  

21. During the consultation, a respondent proposed increasing the threshold for including Digital Assets in the calculation of a Client’s net assets for the purposes of classification as an Assessed Professional Client from 30% to 50%, noting that a higher threshold would support broader participation and market liquidity. AFSA noted that the existing 30% threshold was originally benchmarked against comparable limits applied in other jurisdictions.

22. In considering this proposal, AFSA reviewed international practice and recent market developments. While noting that some jurisdictions are reassessing or even proposing to remove similar limits, AFSA considered that a complete removal of the threshold would not be appropriate at this stage, given the continued exposure to volatility, liquidity risks, and external shocks. At the same time, AFSA recognised that the existing limit could be adjusted to better reflect market maturity and valuation practices.

23. On this basis, AFSA decided to retain a quantitative limit while increasing the threshold from 30% to 50%, striking a balance between safeguards and market flexibility. This revised threshold has been applied consistently across the framework, and in addition the rules were amended to clarify that only Digital Assets admitted to trading on a facility operated by a licensed DATF Operator may be included in the net asset calculation, addressing interpretative uncertainty identified during the consultation.

Technical corrections  

24. In addition to the technical corrections made to the GLO in relation to the definition of a DASP, including aligning the list of Regulated Activities with the intended scope and removing wording inconsistent with the Guidance under DAA 3.2, several minor inconsistencies were also corrected. These included updating the Guidance under DAA 3.8 to include the CIS Rules in the list of AIFC Acts applicable to a DASP carrying on the activity of Managing a Collective Investment Scheme (previously omitted) and amending DAA 3.4.8 (Technology Audit Reports) to replace the reference to “Authorised Firm” with “Digital Asset Service Provider” for consistency.

Feedback not incorporated in the final amendments

25. In addition to the proposals reflected in the final amendments, the consultation also gave rise to a number of further suggestions from market participants. AFSA carefully considered these suggestions alongside the regulatory objectives, supervisory experience, and alignment with international practice, but concluded that they should not be incorporated into the final amendments.

Operational expenses calculation methodology  

26. With regard to the revised capital requirements for DATF Operators, a suggestion was made to clarify the methodology for calculating operational expenses. After reviewing comparable regimes and considering supervisory experience, AFSA decided to maintain a flexible, principle-based approach to capital requirements, ensuring proportionality to the size and complexity of market participants without introducing detailed prescriptive rules for operational expense calculations.

Removal of requirement for AFSA’s approval of Business Rules

27. A further proposal recommended replacing the requirement for AFSA’s prior approval of DATF’s Business Rules with a notification-based approach. AFSA did not support this proposal, as Business Rules constitute a core governance document governing the operation of trading facilities and their relationships with market participants. Maintaining regulatory approval of Business Rules is an important supervisory tool that enables AFSA to ensure effective oversight of trading facilities and is applied consistently across relevant AIFC regulatory regimes.

Removal of technology testing provisions

28. Some respondents also proposed removing certain technology testing and audit requirements under the DAA, on the basis that DATFs already conduct extensive internal testing and undergo external audits as part of their approval and ongoing operations. AFSA did not support this proposal, as robust testing and independent audits are essential to ensure the reliability, security, and resilience of digital asset markets, safeguard client assets and information, and maintain market integrity and investor confidence. These requirements remain consistent with international best practices in light of the operational and cybersecurity risks inherent in digital asset activities.

IT and risk management audit frequency

29. In addition, a proposal was made to change the frequency of independent third-party IT and risk management audits from annual to biennial, citing ongoing internal testing and the cost of external audits. AFSA decided to retain the annual audit requirement, as regular independent reviews are essential to ensure system resilience, effective risk management, and timely identification of emerging technological and cybersecurity risks, consistent with international best practice. Given the pace of technological change and the frequency of new vulnerabilities emerging in this sector, a biennial cycle could materially weaken detection and timely mitigation of risks.

Further extension of period for post-admission notification 

Finally, one respondent proposed extending the period for post-notification for Digital Assets admission from initially proposed 3 business days to 5 business days. AFSA believes that proposed post-admission notification period of 3 business days is already considered proportionate. This timeframe was introduced as a significant relaxation from the standard 10-day pre-notification requirement under the full regime, balancing the need for regulatory oversight with the operational flexibility for DATFs.

INTRODUCTION

      Why are we issuing this Feedback Statement?

    1.    This Feedback Statement has been issued following the public consultation conducted on the proposed amendments to the AIFC Capital Market Framework. It sets out the outcomes of the consultation process and is intended to enhance transparency and regulatory clarity, in particular by:

•      summarising the key themes and views expressed by stakeholders during
  the consultation
•       explaining how the final amendments differ from the proposals consulted on;
•      outlining the main considerations that informed the final policy decisions; and
•        clarifying the rationale for not incorporating certain comments or suggestions.

 

     Who should read this Feedback Statement?

     2.    This Feedback Statement is particularly relevant to stakeholders who participated in the consultation process, as well as to current and potential capital market participants and other interested stakeholders.

 

     Terminology

     3.    Defined terms have the initial letter of the word capitalised, or of each word in a phrase. Definitions are set out in AIFC Glossary. Unless the context otherwise requires, where capitalisation of the initial letter is not used, the expression has its natural meaning.

PART I – BACKGROUND

1.    The AFSA continuously reviews the AIFC capital markets regulatory framework to ensure that it remains effective, proportionate, and aligned with the evolving needs of the market. As part of this ongoing process, AFSA identified the need to further refine certain elements of the framework in order to address practical implementation issues and enhance regulatory efficiency. This assessment was informed by supervisory observations and feedback received through ongoing engagement with market participants.

2.    In parallel, AFSA has continued to monitor regulatory developments in other jurisdictions and evolving international practices, with a view to maintaining the competitiveness and credibility of the AIFC regulatory regime. Taken together, these factors highlighted areas where existing requirements and processes could be clarified, streamlined, or adjusted to reduce unnecessary regulatory barriers while preserving investor protection and market integrity.

3.    AFSA initiated a targeted policy review and developed a set of proposed amendments aimed at improving the efficiency of offering, and listing processes, enhancing accessibility for market participants, and addressing identified gaps and inconsistencies within the framework. These proposals were subsequently published for public consultation to ensure that the proposed changes were informed by stakeholder input prior to finalisation.

4.    In July 2025, the AFSA published Consultation Paper AFSA-P-CE-2025-0001, setting out the proposed amendments to the AIFC Capital Market Framework. The public consultation was conducted from 21 July to 15 September 2025.

5.    Following the conclusion of the public consultation, the AFSA considered the comments and suggestions received. In December 2025, the AFSA Board of Directors reviewed the consultation outcomes and approved the amendments to the AIFC Capital Market Framework.

6.    The AIFC Market Rules, AIFC Authorised Market Institution Rules and AIFC Glossary with the relevant amendments are available on the AIFC and AFSA websites.

7.    The amendments will enter into force on 1 January 2026.

PART II – OUTCOMES OF PUBLIC CONSULTATION

1.    The proposed amendments were generally well received by market participants during the public consultation. Feedback indicated that the proposed changes were viewed as timely and necessary, supporting regulatory efficiency and greater clarity. Following the consultation, 12 amendments were adopted as originally proposed in the Consultation Paper, reflecting that no substantive concerns were raised in relation to these measures.

2.    In particular, these amendments introduce targeted adjustments across Prospectus exemption criteria, disclosure and reporting obligations, procedural requirements, and market access arrangements, together with clarifications to the application of existing regulatory concepts and alignment with the broader AIFC regulatory framework.

3.    Following the public consultation, 2 proposals were reconsidered in light of the feedback received. The proposal relating to the application of corporate governance requirements was clarified to provide greater certainty as to its scope and application. The proposal to remove the prospectus exemption for offers made to fewer than 50 investors via an Authorised Investment Exchange was withdrawn, as the feedback indicated that this exemption continues to serve a practical purpose in the market.

4.    The consultation also resulted in the introduction of several new proposals, informed by feedback received from market participants, which were incorporated into the final amendments. At the same time, a number of proposals raised during the consultation were not taken forward. In some cases, the supporting rationale was not considered sufficient to justify immediate changes, while in others the issues identified would benefit from more comprehensive assessment, which AFSA will consider in the context of future reviews of the capital markets regulatory framework.

Application of the Corporate Governance Principles to Equity Securities

5.    For public consultation, AFSA proposed to apply the Corporate Governance Principles, including requirements relating to directors’ duties and fair treatment of shareholders, only to Issuers of Shares, with the objective of reducing unnecessary barriers to debt issuance and enhancing the attractiveness of the AIFC for debt offerings. In response, comments were received suggesting that the proposal be further clarified to provide greater certainty as to its scope and application.

6.    In particular, the proposal suggested that application of the Corporate Governance Principles and the requirements relating to directors’ duties and the fair treatment of shareholders to Issuers of Shares should extend to Issuers of Equity Securities. This broader category would encompass other instruments such as Global Depositary Receipts (GDRs), certificates, and similar equity-linked instruments.

7.    AFSA agreed with this proposal. Expanding the scope to Issuers of Equity Securities, rather than Issuers of Shares only, will ensure a consistent and comprehensive application of governance standards across a wider range of equity-linked instruments, promoting fair treatment of shareholders and alignment with international best practice. The term “Equity Securities” is already defined in GLO and used for the purposes of MAR, which supports consistency and coherence across the AIFC regulatory framework.

Retaining exemption from Prospectus for offers made to fewer than 50 investors

8.    Based on the market feedback, AFSA initially proposed removing the exemption under MAR 1.2.2(1)(b) for offers made to fewer than 50 Investors. The proposal was justified on the basis that this exemption had limited practical relevance to traditional exchanges, which are generally designed to facilitate broad access to capital markets rather than narrowly targeted offerings.

9.    During the public consultation, however, one of market participants noted that while the exemption may indeed be of limited relevance for traditional Authorised Investment Exchanges, it remains applicable to exchanges facilitating the trading of Security Tokens. Respondent explained that such exchanges may conduct narrowly targeted offerings involving a limited number of investors, where the exemption could have legitimate use.

10. Taking this feedback into account, AFSA recognised that situations where this exemption may be applied could arise in practice. At the same time, its retention does not create any operational challenges for traditional exchanges, which may opt not to rely on this exemption and, if necessary, reflect this in its Business Rules. Accordingly, AFSA decided to retain the exemption to preserve flexibility for other Authorised Investment Exchanges.

Requirement to appoint an agent for service of process

11. Prior to public consultation, there was a market proposal, which sought to remove the requirement for issuers and members to appoint a process agent in the AIFC. It was suggested to replace it with a requirement to provide up-to-date contact details of a nominated person, email, or postal address. The rationale was that the agent requirement creates unnecessary administrative burdens, while direct contact details would suffice for communication.

12. However, AFSA considered that removing the process agent requirement would complicate communication with non-KZ entities, especially in court cases. Service of process is a fundamental legal safeguard, and the role of the process agent ensures that documents served through AIFC Court procedures are duly acknowledged and forwarded. As a result, this proposal was not included in the initial draft amendments for public consultation.

13. During the consultation period, AFSA received a revised proposal suggesting that, rather than removing the existing process agent requirement for issuers and members entirely, it should be disapplied for issuers incorporated in Kazakhstan while being retained for foreign issuers. The proposal noted that domestic issuers can be effectively reached without an additional process agent, whose role is limited to receiving service of process in the AIFC and forwarding the relevant documents. AFSA supported this approach and reflected it in the final amendments.

Prospectus exemption for Securities admitted to trading on “other market”

14. One of the respondent has shared new proposal regarding the existing exemption from Prospectus requirement under MAR 1.2.2(1)(m), which currently applies to Securities already admitted to trading on another Authorised Investment Exchange, Recognised Non-AIFC Market Institution or other Equivalent Regulated Exchange (“the other market”) and that have been continuously traded on such other market for more than 18 months, provided the issuer has complied with ongoing obligations for trading on that other market.

15. Two key amendments were proposed. First, to remove the 18-month continuous trading requirement, which is usually applicable to securities admitted under the cross-listing regime. Second, to enhance a dual-listing regime, allowing securities to be admitted to trading simultaneously on the Authorised Investment Exchange and another Equivalent Regulated Exchange under Prospectus exemption.  

16. It was argued that requiring issuers to produce a full Prospectus because trading has not yet reached the 18-month mark increases costs for issuers and reduces the attractiveness of the AIFC as a venue for cross-listings. Furthermore, issuers preparing for a dual listing usually work primarily with the home regulator to have the prospectus approved and therefore it is administratively difficult for issuers to justify revisions that are not strictly required in the primary jurisdiction.

17. Following internal discussions and consultations with the market, AFSA has accepted these proposals, given the practical experience gained by the market to date and the objective of supporting both cross-listing and dual-listing regimes. With that where a Prospectus originates from a jurisdiction with Prospectus standards less equivalent and may give rise to investor protection concerns, the Authorised Investment Exchange still may require a full Prospectus.   

Feedback not incorporated in the final amendments

18. In addition to the proposals reflected in the final amendments, the consultation also gave rise to a number of further suggestions from market participants. AFSA carefully considered these suggestions alongside the regulatory objectives, supervisory experience, and alignment with international practice, but concluded that they should not be incorporated into the final amendments.

Extension of the Prospectus exemption to additional categories of investors

19. A proposal from market participants was received to expand the categories of investors eligible for exemption from the Prospectus requirement. It was suggested that, in addition to Professional Clients (as defined under the AIFC regulatory framework), the exemption should also cover “Qualified Clients” or “Qualified Investors” as defined under Kazakhstan’s legislation or other recognised jurisdictions.

20. AFSA did not support the proposal, as introducing “Qualified Clients” or “Qualified Investors” alongside the existing Professional Client category would undermine regulatory clarity and the objective of alignment with broader AIFC regulatory framework. Authorised Firms operating in the AIFC must adhere to the AIFC’s client classification requirements and thus we consider that exemptions should continue to refer solely to Professional Clients.

21. With that AFSA recognises that this issue may have arisen in the context of the recognition regime, where Recognised Non-AIFC Members (RNAMs) may offer AIFC-listed securities to investors in their home jurisdictions whose client classifications (e.g., “Qualified Investors”) differ from the AIFC’s definition of a Professional Client. AFSA acknowledges that this distinction may indeed warrant further clarification; however, as a comprehensive review of the recognition regime is anticipated, it would be more appropriate to consider this matter in that context.

Further broadening membership eligibility at Authorised Market Institutions

22. During the public consultation, AFSA proposed to broaden the categories of persons eligible for membership in an Authorised Market Institution by permitting an Authorised Firm, without specification of licence type, to become a member of an Authorised Market Institution, provided it meets the admission criteria set out in the Membership Rules.

23. In response to this proposal, it was suggested that membership eligibility should also be extended to individuals (natural persons) and body corporates other than Authorised Firms. It was argued that, without such flexibility, the framework could be perceived as less competitive compared to crypto-asset exchanges, for which membership for body corporates or individuals (natural persons) for own investment purposes trading is allowed.

24. AFSA acknowledges this concern and considers that this matter requires a holistic and coordinated review across all frameworks to ensure consistency before any amendments are introduced. This issue will be further assessed in the course of future framework revisions.

Further reduction of closed period for Restricted Person

25. An amendment to the definition of a “closed period” was proposed for public consultation to provide that it would end upon the announcement or publication of annual, semi-annual, or quarterly preliminary results, provided that such results contain the key information expected to be included in the final financial statements. A subsequent comment suggested further reducing the closed period to 30 days prior to such announcements; however, this was not supported, as the proposed amendment already achieves an appropriate reduction and any further shortening could create information asymmetry and undermine fair investment decision-making.

Lowering disclosure requirements for Exempt Securities

26. There was a proposal to streamline disclosure requirements for Exempt Securities by limiting disclosure obligations to audited annual financial statements and essential security information to reduce the regulatory burden and align with the initiative to simplify disclosure requirements for professional bond issuers. No further clarification was provided by respondent regarding which disclosure obligations should be removed or modified beyond what is already exempted under the current provisions.

27. In response, AFSA would like to clarify that Exempt Securities are already subject to reduced disclosure obligations under the current framework. According to MAR 3.1-1(2) Reporting Entities that are Issuers of Exempt Securities (except where such Exempt Securities have been subsequently offered to the public) are not required to prepare annual and semi-annual reports but must disclose their audited annual financial statements and interim financial statements or management account statements pursuant to MAR 3.4.1(2).