Middle East Links – June 2025

Changes to “Accepted” Virtual Asset framework

The ADGM Financial Services Authority (“FSRA”) has changed the process by which Virtual Assets (“VAs”) are accepted for use within ADGM.  Specific “Regulated Activities” can be undertaken in relation to Accepted Virtual Assets (“AVAs”), which must satisfy certain criteria before being approved for use within ADGM.

Licensed VA firms are now permitted to assess tokens independently against the FSRA’s detailed criteria, applying risk-weighted assessments as per the revised VA Guidance on the Regulation of Virtual Asset Activities in ADGM, which address factors such as traceability, liquidity, technological resilience, and functional utility. This marks a notable departure from the prior FSRA-led pre-approval process, accelerating token onboarding while maintaining regulatory transparency and accountability.

The FSRA has the power to raise an objection to the proposed use of any VA if it is of the view that the VA does not comply with applicable assessment requirements or the VA Firm has not conducted adequate due diligence. VA firms must continuously monitor their AVAs to ensure ongoing compliance and comply with enhanced reporting requirements.

Data processing in the ADGM: expanded “substantial public interest” grounds

Proposed new Data Protection Regulations (Substantial Public Interest Conditions) Rules would introduce additional substantial public interest grounds to process special categories of personal data in the ADGM Data Protection Regulations 2021. Special categories of personal data include more sensitive types of data, such as relating to racial or ethnic origin, religious beliefs or genetic or biometric data.

Under the current regime, processing special categories of data is generally prohibited unless one of the existing “substantial public interest” grounds is met, such as where an individual has given explicit consent or where processing is necessary for the establishment, exercise or defence of legal claims. The amendments would widen the categories of “substantial public interest” grounds to allow the processing of special categories of personal data in connection with insurance activities and safeguarding of children and of individuals at risk, subject to processing conditions.

DIFC Law of Security amended

The DIFC Law of Security has been amended, with effect from 15 July 2025.

In a welcome clarification of jurisdictional scope, the amended law introduces a new provision that the law applicable to the creation, effectiveness against third parties, priority and enforcement of a security right in “Intermediated Financial Property” is the law of the relevant Investment Intermediary's jurisdiction. The term “Intermediated Financial Property” is broadly framed to include shares in DIFC and non-DIFC companies that are held by a custodian in any jurisdiction. The new provision therefore addresses conflicts of laws issues and limits the previous extra-jurisdictional scope of the DIFC Law of Security in relation to this type of asset, such that it now applies only where the Intermediated Financial Property is held via an intermediary located in the DIFC.

Provisions relating to security over “Financial Collateral” have been refined. Notably, in order to be validly created and perfected, the secured creditor/collateral taker must have control of the Financial Collateral. Priority is determined by the establishment of control, and not registration with the DIFC Registrar of Security.

DFSA consults on changes to rules on Offers of Securities to the Public from the DIFC

Changes to the rules on public offers in the DIFC are on the horizon. The Dubai Financial Services Authority (“DFSA”) has proposed amendments to the DIFC Markets Law (DIFC Law No. 1 of 2012), the DIFC Regulatory Law (DIFC Law No.1 of 2004) and the DFSA Rulebook, following a consultation in June 2025.

Currently, the DIFC Markets Law mandates that an offer of securities (other than units of a fund for which special rules apply) to the public “in or from” the DIFC requires a prospectus approved by the DFSA, unless an exemption applies. The DFSA now proposes to align with practices of other international regulators by focussing solely on offers of securities ‘in’ its jurisdiction. Offers ‘from’ the DIFC would no longer fall within its regulatory scope. In our view, offers “in” the DIFC refers to offers targeting persons in the DIFC and offers “from” the DIFC refers to offers targeted at persons outside the DIFC. This change addresses duplicative regulatory requirements faced by DIFC entities offering securities outside the DIFC, resulting in them being subject to DIFC requirements and applicable requirements in the overseas market or markets into which they target that offer. The general prohibition against misconduct in the DIFC Regulatory Law (DIFC Law No.1 of 2004) would remain, such that the relevant offering materials in the target jurisdictions must not include information that is misleading, deceptive, fraudulent or dishonest.

If offers of securities to the public ‘from’ the DIFC are no longer regulated by the Markets Law, the rules relating to financial promotions in DIFC Regulatory Law would apply. Consequently, the DFSA proposes to disapply the financial promotion rules in relation to offers of securities to the public ‘from’ the DIFC, given that it is no longer intended that such offers would fall within its regulatory perimeter.

The “Exempt Offer” regime remains unchanged. High denomination securities issuances to professional or institutional investors already fall outside of the DIFC Markets Law (whether or not DIFC investors are targeted), and would continue to be exempt under the modified regime.

New decision regulates Bankruptcy Court

Further details of the UAE’s Bankruptcy Court and the Bankruptcy Administration have been set out in a new decision issued by the Federal Judicial Council. Federal Judicial Council Decision No.39 of 2025 regarding the Organisation of the Bankruptcy Court (the “Decision”) was issued in June 2025. The Bankruptcy Court and the Bankruptcy Administration are core features of the supportive infrastructure for the UAE’s bankruptcy regime, pursuant to Federal Law Decree No.51 of 2023 (the “Bankruptcy Law”) which came into force in May 2024.

The Bankruptcy Courts play an active and substantive role in many of the procedures under the Bankruptcy Law. The Decision makes clear that the Bankruptcy Court is headquartered in the Abu Dhabi Federal Court of First Instance, with local divisions in the other Emirates. It also authorises the Bankruptcy Court to engage experts to support it with specified tasks. The Decision sets out details of the Bankruptcy Administration’s divisions and their responsibilities. The Bankruptcy Administration is a specialised division established at the headquarters of the Bankruptcy Court, which plays a significant role in supporting the Bankruptcy Court as detailed in the Bankruptcy Law. The Applications, Notifications, Objections and Grievances Division receives and reviews applications to commence proceedings (as well as objections and appeals) and assists with other tasks such as announcements and notifications. The Oversight and Follow-up Division is responsible for supervising trustees and dealing with breaches and offences.

The Decision further enhances the structural support for the bankruptcy framework and should help to facilitate the efficient and reliable management of proceedings by the Bankruptcy Court and the Bankruptcy Administration. This will be key in the UAE’s relatively new framework being viewed as a reliable regime to facilitate the rescue of viable businesses and the orderly winding-up of insolvent companies.

SCA issues tokenisation framework

The UAE Securities and Commodities Authority (“SCA”) has established a new framework regulating security and commodity contract tokens issued in and/or from within the UAE. The framework is set out in SCA Resolution No. (15/Chairman) of 2025 Concerning the Regulation as to Security Tokens and Commodity Tokens Contracts, issued in June 2025.

A Security Token is defined as securities the rights attaching to which are registered and transferrable via DLT. The definition captures equity tokens and bond tokens. Commodity Token Contracts are a type of digital asset that are based on the value of “Commodity Contracts”, which are defined as contracts on commodities, indicators, currencies, or other financial instruments (such as options contracts and future contracts). Both Security Tokens and Commodity Contract Tokens are characterised as “a right under an agreement between two parties” that is recorded in the distributed ledger and “may be exercised, traded and transferred to others only through the distributed ledger”. The regulations govern the transfer, pledge, trading and settlement of Security Tokens and Commodity Contract Tokens.

You can read more about the SCA consultation here.

Dubai’s Virtual Asset regime updated

The Dubai Virtual Asset Regulatory Authority (“VARA”) has recently updated its Rulebooks, aligning them more closely with aspects of international best practice. VARA is responsible for regulating virtual asset (“VA”) activities and Virtual Asset Service Providers (“VASPs”) operating in Dubai.

Key developments include changes to VA issuance requirements (with new concepts of Asset-Referenced Virtual Assets and Exempt VAs) and a material increase in the net asset and income thresholds for Qualified Investors. The updated Rulebooks also impose stricter requirements on technology governance and introduce new obligations regarding anti-money laundering and counter-terrorism financing assessments. Following the end of the compliance deadline on 19 June 2015, VASPs operating in Dubai need to ensure that their compliance frameworks and client documentation are compliant with these regulatory changes.

You can read more information about the VARA Rulebook changes in our recent Tech Insights blog post.

SCA extends regulatory reach to “Finfluencers”

Individuals in the UAE who provide financial advice or recommendations via social media and other public platforms are now regulated as “Finfluencers” by the UAE Securities and Commodities Authority (“SCA”) for the first time under new SCA Resolution No.10/Chairman of 2025, issued in May 2025.

To qualify as a Finfluencer under the new regulation, individuals must either be certified financial analysts or demonstrate substantial market influence through experience and audience reach (for example, they have no fewer than 1,000 real followers, or at least 6 months experience in the financial or investment field). Registration with the SCA is mandatory, subject to annual renewal and “fit and proper” criteria. SCA will maintain and publish the register of Finfluencers.

When providing recommendations, Finfluencers must comply with the disclosure obligations, obligations regarding content and additional obligations, such as attending training and complying with professional ethics. Issuers or SCA-licensed entities contracting with Finfluencers are also subject to requirements, including that they must review the content of financial recommendations and maintain policies regarding the selection of Finfluencers.

UAE Central Bank Exchange Business Regulation

The Central Bank of the UAE published a new Exchange Business Regulation (C 7/2025 in June 2025 which supersedes the previous regulations, dating from 2014. It applies to entities applying or licensed to carrying out the regulated activity of providing currency exchange and money transfer services.

It introduces four licence categories, depending on the specific activities the applicant proposes to carry out, replacing the previous single licence framework:

• Category I Licence: currency exchange, remittances, salary processing
• Category II Licence: currency exchange, remittances
• Category III Licence: currency exchange 
• Category IV Licence: remittances via digital channels

Applicants must meet the eligibility criteria and requirements as to legal form, minimum national ownership and paid-up capital. Notably, foreign entities remain restricted to a maximum of 40 per cent ownership, unless they fall under the newly created Category IV License, which permits 100 per cent foreign ownership for digital-only remittance services. Minimum paid-up capital is now determined by a ratio of paid-up capital to equity, as stipulated by the UAE Central Bank, rather than fixed AED amounts. Licensed entities must also adhere to new financial ratios concerning total assets, equity, debt, and liquidity. Further regulations and/or guidance is expected from the UAE Central Bank.

Licensed entities must comply with enhanced obligations around corporate governance and operational matters, IT infrastructure, reporting, accounts and audit, and security requirements apply, as well as consumer protection and AML/CFT regulations. Further, all transactions must be settled in AED via appropriate payment systems of the UAE Central Bank.

The 2018 Standards for Licensing and Monitoring of Exchange Business remain in effect.

New regulations supplement the Investment Law regime

Saudi Arabia has introduced new implementing regulations to supplement the Investment Law (Royal Decree No. M19/1446), which came into force in February 2025. The new regime allows both domestic and foreign investors to acquire minority, majority, or wholly-owned equity stakes in companies incorporated in the Kingdom, provided these companies do not engage in activities included in the list of “excluded activities" which is yet to be published. For non-excluded activities, registration is required. The Ministry of Investment (MISA) approval requirements for foreign investment in excluded activities are expected to be published shortly in the Investor Guide.

The regulations, set out in Ministerial Decision No. 1086/1446, emphasize equitable treatment for all investors, whether domestic or foreign. They also provide for investors’ rights freely to transfer funds related to their investments to and from the Kingdom without delay. Investment incentives will be offered, and further regulations expected to clarify the classification system and eligibility criteria for these incentives. The Government retains the discretion to regulate investment matters in the public interest, including to protect national security or public order. Foreign investments posing a threat to national security will be subject to review and the investment may be suspended.

You can read more about Saudi Arabia’s new Investment Law 2024 in our recent alert.

GAC updates merger control guidelines

Saudi Arabia clarified its merger control rules in an updated set of guidelines published in April 2025. The General Authority for Competition (“GAC”) has published its 5th edition of its Economic Concentration Review Guidelines, including more granular guidance on thresholds to trigger a filing, an expansion of the scope of exempted transactions, and adopting a more detailed test for determining ‘control’.

You can read more about the rapidly evolving merger control landscape in the MENA region in our latest update on MENA Merger Rules in Transition: Key changes to the transaction playbook in Saudi Arabia, UAE, and Egypt.

Recent Capital Market Authority regulations and consultations

The Capital Market Authority (“CMA”) has issued some important reforms recently and the regulatory environment is poised for further refinement, following several recent public consultations.

The CMA’s Investment Funds Regulations and the Real Estate Investment Funds Regulations have been updated, to align with aspects of international best practice. Changes range from broadening the scope of licensed capital market institutions that may distribute foreign funds in a private placement and the methods of distribution, to introducing more rigorous governance standards and investor protections.

Amendments to the Rules on the Offer of Securities and Continuing Obligations enable foreign companies to register and offer depositary receipts in the Kingdom that correspond to their shares in the foreign financial market, with CMA approval.  The requirements for registering and offering depositary receipts will be similar to those for shares.

The CMA is proposing to enable private sector companies to list on Nomu, the Parallel Market in Saudi Arabia with lighter listing requirements, through Special Purpose Acquisition Companies (“SPACs") in accordance with the Rules on the Offer of Securities and Continuing Obligations. Key conditions would require a SPAC to:

• adopt the structure of a joint stock company, with redeemable shares, and have minimum capital of one hundred million Saudi riyals after the offering;
• deposit at least 90 per cent of the SPAC's capital following the offering in a dedicated escrow account held with a local bank, which may only be accessed under specified circumstances; and 
• appoint a sponsor from capital market institutions licensed by CMA to manage investments and operate funds and the sponsor’s ownership of the SPAC’s capital must not fall below 5 per cent or exceed 20 per cent.

Qualified investors in the Parallel Market would be able to invest in SPACs listed on the Parallel Market.

Finally, the CMA has also recently consulted on the changes to the licensing requirements for brokerage companies, which would see greater flexibility in capital requirements and legal form for brokerage companies, aimed stimulating growth in dealing and custody business.

New Saudi Arabian netting opinions

The International Swaps and Derivatives Association (ISDA) has published two legal opinions on the enforceability of close-out netting under each of the 2010 ISDA/IIFM Tahawwut Master Agreement and the 1992 and 2002 ISDA Master Agreements in Saudi Arabia. The opinions form part of a suite of jurisdiction-specific opinions that ISDA provides to its members. The opinion in relation to the 2010 ISDA/IIFM Tahawwut Master Agreement was published by ISDA  in collaboration with the International Islamic Financial Market (IIFM).

The opinions, issued by STAT Law Firm, opine that the close-out netting mechanism under the frameworks set out in each of the 2010 ISDA/IIFM Tahawwut Master Agreement and the 1992 and 2002 ISDA Master Agreements would be enforceable as a matter of Saudi Arabian law against certain Saudi counterparties, where at least one of the parties is a SAMA-regulated entity, both before and after the commencement of insolvency proceedings under the Saudi Arabian bankruptcy regime.

The opinions reference the recently issued SAMA Close-out Netting and related Collateral Arrangements Regulation (Decision No.1/46) dated 18/08/1446H), which addresses the enforceability of the bilateral close-out netting and multibranch netting provisions in eligible “Qualified Financial Contracts” involving a SAMA-regulated counterparty.

You can read more about close-out netting in Saudi Arabia in our recent article in the March issue of Middle East Links.