ADGM’s FSRA releases new framework for regulating ‘staking’ of virtual assets

A consultation, Consultation Paper No. 10 of 2025, by the ADGM's Financial Services Regulatory Authority (FSRA) (10-page // 263KB PDF) proposes clear rules for when staking – the process of committing or locking a client’s virtual assets for blockchain validation processes – becomes a regulated activity and sets out due diligence, disclosure, reporting and FSRA notification requirements for firms.

The new paper follows industry feedback to a previous consultation paper and aims to clarify the regulatory obligations for authorised persons engaging in staking activities using client-held VAs.

Marie Chowdhry, an expert in financial regulation at Pinsent Masons, said: “The proposals in this consultation build on Consultation Paper No. 11 of 2024 (19-page // 300KB PDF) and outline the proposed approach by the FSRA to the regulation of arrangements which involve participation in a blockchain validation process based on a proof-of-stake (PoS) consensus mechanism.” 

“Other yield generating activities involving VAs including liquidity mining and yield farming, often referred to in the VA sector as ‘staking’, are considered by the FSRA to be distinct activities and are not addressed by the proposals outlined in the consultation,” she said.

“The FSRA is aware that certain staking arrangements may result in the issuance of liquid staking tokens (LSTs) and has noted that it will continue to monitor developments in this area and may implement an LST regime in the future. Accordingly, firms operating in this space are advised to monitor the FSRA’s developments in the area closely.”

“The changes will be particularly relevant to custodians of VAs and asset managers operating in the ADGM, applicants seeking to offer staking services, legal, compliance and risk teams advising digital asset firms, blockchain infrastructure providers and staking service operators.”

Under the proposed new rules, a VA custodian, whose core function is the safeguarding of clients’ assets, would only be permitted to stake client VAs on the specific instruction of clients. A VA custodian that wishes to exercise discretion in staking its clients’ VAs would need to apply for a financial services licence for the regulated activity of managing assets.

Solo staking, where individuals stake their own assets, and technical staking services, where there is no custody of client assets, remain unregulated. Intermediated staking, where an authorised person holds or controls client VAs and stakes them, is regulated under the framework.

Lana Akkad, an expert in regulatory matters at Pinsent Masons, said: “The emphasis on due diligence, smart contract review and client disclosures reflects a thoughtful approach to managing the unique risks of staking, including validator performance and protocol vulnerabilities.” 

“For firms operating in and from the ADGM, this framework offers a pathway to offer staking services responsibly, while maintaining client trust and regulatory confidence,” she said.

“We encourage stakeholders to engage with the consultation and prepare for the operational and compliance implications of these proposals.”

Under the proposed framework, only virtual assets approved and accepted by the FSRA can be staked.

The consultation closes on 31 October.