By CRYPTOVERSE Legal Consultancy
Two investment apps can look almost identical to a customer.
Both ask questions about risk tolerance. Both display a suggested portfolio. Both connect to a broker. Yet one app may only recommend investments, while the other can decide when to trade without asking the client again.
That difference can change the FSRA Financial Services Permission (FSP) the business needs in Abu Dhabi Global Market (ADGM).
The licensing question is not “Does the platform use AI?” It is:
Who recommends the investment, who decides whether a trade happens, and who makes the transaction happen?
The FSRA’s Digital Investment Management Guidance, updated in November 2025, identifies three activities commonly involved in digital investment platforms: Advising on Investments or Credit, Managing Assets, and Arranging Deals in Investments. A single customer journey may involve more than one.
Start with the customer journey
A founder may describe a product as a robo-adviser, AI wealth platform or investment marketplace. Those labels do not determine its regulatory classification.
Instead, follow a customer from registration to investment:
- What information does the platform collect?
- Does it recommend an investment or portfolio?
- Does the customer decide whether to proceed?
- Can the platform make later investment decisions without fresh approval?
- Who passes instructions to the broker?
- Who holds the client’s money and investments?
The answers reveal where the regulated activity occurs. They also show whether the company is providing a financial service itself or merely supplying technology to another authorised firm.
Permission 1: Advising on Investments or Credit
The FSRA guidance gives a straightforward example of Advising on Investments or Credit: recommending that a client invest in a portfolio of Financial Instruments, or recommending that they buy or sell particular instruments to rebalance it. Imagine an app asks a user about their age, income, investment horizon and tolerance for losses. It then says:
“Based on your answers, Portfolio Growth is suitable for you. We recommend investing in it.”
The software has produced a recommendation for that user. Replacing a human adviser with an algorithm does not make the recommendation disappear for regulatory purposes.
The exact perimeter still depends on the instrument, communication and context. But a founder should not assume that describing the output as a “suggestion” or adding a generic disclaimer removes the need to assess whether the platform is giving regulated advice.
The decision that matters
Is the platform presenting information for the user to evaluate, or expressing a view about what that user should invest in?
A client-specific recommendation is the clearest signal that the advice permission needs to be assessed.
Permission 2: Managing Assets
Managing Assets becomes relevant when the platform exercises discretion over a client’s portfolio.
The FSRA guidance gives the example of a digital manager deciding to rebalance a client portfolio and instructing a broker to buy or sell investments on the client’s behalf along with obtaining a fund manager licence in ADGM. Guidance, paragraph 3.2(b).
Suppose a client initially chooses an investment strategy and authorises the platform to keep the portfolio within agreed parameters. Three months later, the algorithm decides to sell one holding and buy another. The client receives a notification after the decision, but does not approve that individual trade beforehand.
The key feature is who had authority to make the investment decision. An algorithm can exercise that authority as part of the firm’s service, even though software performs the calculation.
The decision that matters
Does the client decide on each proposed transaction, or has the platform been given authority to decide and act within an agreed mandate?
That distinction often separates an advisory journey from discretionary management.
Permission 3: Arranging Deals in Investments
A platform can also play a regulated role in bringing about the investment transaction.
The FSRA guidance describes an example where the platform recommends a portfolio and, with the client’s consent, passes instructions to a broker to buy the Financial Instruments. That workflow raises Arranging Deals in Investments.
Consider an app that displays a recommendation. The client presses “Invest now.” The app transmits the order to an execution broker.
The client made the final decision, so the platform may not be exercising discretionary management in that transaction. It may nevertheless be arranging the deal through the steps it performs.
The decision that matters
What does the platform do between the client’s investment decision and the completed transaction?
A broker’s involvement does not, by itself, answer whether the platform also carries on arranging activity.
The permission test in four examples
| Platform model | What happens | Main permission question |
| Portfolio recommendation app | The app recommends a portfolio; the client decides whether to invest elsewhere. | Advising on Investments or Credit |
| Recommendation plus execution journey | The app recommends a portfolio and sends the client’s authorised instruction to a broker. | Advising and Arranging Deals in Investments |
| Automated discretionary portfolio | The client gives an ongoing mandate; the platform decides when to rebalance and instructs trades. | Managing Assets |
| White-label software supplier | The firm supplies technology to an authorised investment manager but does not itself provide investment services to end clients. | Assess whether it remains solely a technology provider. |
These are illustrations of the FSRA guidance, not automatic classifications for every app. The legal analysis must follow the exact contract, communications and operational flow. The guidance says firms operating solely as technology providers are not Digital Investment Managers requiring an FSP on that basis.
Does a Managing Assets permission also cover advice and arranging?
This is an important qualification.
The FSRA guidance states that a Digital Investment Manager authorised for Managing Assets does not need separate Advising or Arranging permissions where those activities are undertaken incidentally as part of its investment management activities.
For example, discussions and transaction steps that form part of a firm’s discretionary management service may be incidental to that service.
But the guidance draws a boundary: if the firm runs separate advisory accounts or arranges deals that are separate from, or not incidental to, its discretionary management, it must assess the need for those additional permissions.
A platform offering both a “We manage it for you” product and a “You choose, we recommend” product should assess each journey independently. The existence of a Managing Assets permission should not be treated as a blanket answer for every service the app offers.
A fourth question: are you arranging custody?
Many digital platforms use a third-party custodian for virtual asset funds advisory services. That is often sensible, but it creates another perimeter question.
The FSRA guidance distinguishes between a model in which the manager holds Client Assets through an account with a third-party banker or custodian, and a model in which it arranges for clients to establish a direct relationship with a regulated custodian. The latter may require an FSP for Arranging Custody, unless a relevant exclusion applies.
A founder should therefore document the full asset flow:
Client → platform → broker → custodian
Who opens the account? Who contracts with whom? Who can instruct movement of assets? Who is paid for the introduction? Those details can matter to the permissions and client asset analysis.
What if the app uses a human adviser as well?
A hybrid model does not escape the digital investment management framework. The FSRA guidance covers platforms where a client can discuss algorithm-generated advice with a human adviser as well as fully digital platforms.
The firm should establish whether the human adviser:
- Merely explains an existing recommendation;
- Changes the recommendation;
- Makes a separate recommendation;
- Approves trades; or
- Takes discretionary decisions for the client.
The human and automated parts of the service should be reflected consistently in the client agreement, FSP application, staff responsibilities and model governance framework.
Why the choice affects more than the licence form
Each permission brings its own regulatory consequences. The FSRA guidance links the activities to different prudential categories and capital requirements. Managing Assets is treated differently from advice or arranging; holding Client Assets can further affect the analysis. Guidance, paragraph 3.5.
The business must also consider:
- Suitability: Can it reasonably support the recommendations or discretionary decisions made for each client?
- Algorithm governance: Can senior management explain, test, monitor and, if needed, stop the model?
- Disclosures: Do clients understand whether the firm advises, arranges or manages their assets?
- Custody: Who holds investments and what happens if a service provider fails?
- Technology and financial crime controls: Can the platform identify system failures, suspicious activity and data security risks?
The guidance discusses these expectations in detail while avoiding legal mistakes in ADGM crypto fund licensing. An automated interface changes how the service is delivered; it does not remove the obligations attached to the service.
A founder’s one-page permission map
Before applying for an FSRA digital investment management licence, write one sentence for each of the following:
- Our client is: the end investor, an authorised financial firm, or both.
- Our platform recommends: specific investments, portfolios, neither, or both.
- Our client approves: every trade, only the initial mandate, or neither.
- Our platform decides: whether or when to trade, within these defined limits.
- Our platform sends instructions: to this broker or other execution party.
- Client assets are held by: this entity, under this contractual arrangement.
- Our revenue comes from: these clients or counterparties for these services.
- Our human team can intervene by: reviewing, changing or stopping these decisions.
If those eight sentences cannot be answered clearly, the product design is probably not yet precise enough for a reliable permissions assessment.
The takeaway
For an ADGM digital investment platform, the most useful licensing test is simple:
- A recommendation raises the Advising on Investments or Credit question.
- A discretionary investment decision raises the Managing Assets question.
- Facilitating a client’s transaction raises the Arranging Deals in Investments question.
- Establishing a custody relationship may raise an Arranging Custody question.
Some activities may be incidental to authorised discretionary management; others require separate permissions. The answer depends on what the platform actually does for each client.
CRYPTOVERSE Legal Consultancy advises founders and financial firms on ADGM fund setup and licensing services along with FSRA regulatory perimeter assessments, digital investment management licensing, FSP applications and the policies needed to operate investment technology platforms.
Disclaimer: This article provides general information based on the FSRA’s Supplementary Guidance – Digital Investment Management, version 2 dated 6 November 2025. It is not legal advice on a particular platform, client journey or proposed regulated activity. The current rules, issued FSP and relevant contracts should be reviewed together.
FAQs
1. Does using AI or an algorithm change what FSRA permission a platform needs?
No. The classification depends on what the platform actually does — whether it recommends, decides, or executes — not on whether a human or an algorithm performs that function.
2. If my app recommends a portfolio but the client decides whether to invest, what permission applies?
Likely Advising on Investments or Credit. The key signal is that the platform is producing a client-specific recommendation, while the client retains the final decision.
3. What makes a platform “Managing Assets” rather than just advising?
Discretion. If the platform can decide to rebalance or trade a client’s portfolio without seeking fresh approval each time, within an agreed mandate, it’s exercising the authority that defines Managing Assets.
4. If my platform sends a client’s approved trade to a broker, is that a separate regulated activity?
Potentially yes — this may constitute Arranging Deals in Investments, depending on the steps the platform performs between the client’s decision and the completed transaction.
5. Does a Managing Assets permission automatically cover advice and arranging as well?
Only where those activities are incidental to the discretionary management service. Separate advisory accounts or arranging activity outside that scope may require their own permissions.