Two Jurisdictions, One Gulf
Within a 90-minute drive along Sheikh Zayed Road, two international financial centres operate under English common law, regulate financial services to international standards, house their own courts staffed by retired judges from the English and Commonwealth bench, and compete for the same pool of global banks, asset managers, fintech companies, and professional services firms. This is, by any measure, an extraordinary state of affairs.
The Dubai International Financial Centre was established in 2004. It has had two decades to build its ecosystem and now hosts more than 4,500 registered entities. It is the Gulf’s established financial hub — the address that global institutions default to when they enter the region.
The Abu Dhabi Global Market was established in 2013 and commenced operations in 2015. It hosts approximately 1,800 registered entities and is growing rapidly. It is the challenger — younger, smaller, but with the backing of the world’s wealthiest emirate and a regulatory strategy that has made it the Gulf’s preferred jurisdiction for digital assets and financial innovation.
The question that investors, financial institutions, and regulators ask is straightforward: which one wins? The answer is more complex than the question suggests.
DIFC: The Incumbent
DIFC’s advantages are the advantages of incumbency. Twenty years of operation have produced a critical mass of institutions — banks, insurers, asset managers, law firms, accounting firms, family offices — that creates its own gravitational pull. A bank that sets up in DIFC can walk down the street to meet its counterparties, its regulators, its legal advisers, and its auditors. This density of institutional presence is DIFC’s deepest competitive advantage and the one that is hardest for a competitor to replicate.
The numbers reflect this incumbency. DIFC’s registered entities exceed 4,500, with combined assets under management estimated at over $600 billion for the fund management firms alone. The centre employs approximately 40,000 professionals. Its court system, the DIFC Courts, has a two-decade track record of adjudicating complex commercial disputes, providing the legal certainty that international financial institutions require.
DIFC’s regulatory body, the Dubai Financial Services Authority (DFSA), has built a reputation as a credible, internationally benchmarked regulator. The DFSA regulates banking, insurance, asset management, securities, and — more recently — digital assets under a framework that mirrors the standards of the UK’s Financial Conduct Authority and the regulatory bodies of other major financial centres.
The physical infrastructure is also mature. DIFC occupies a purpose-built district in central Dubai, anchored by the Gate Building, with commercial towers, residential buildings, retail, and restaurants creating a self-contained professional community. The district’s physical coherence — a walkable urban neighbourhood dedicated to finance — is something that ADGM, located on Al Maryah Island in Abu Dhabi, is still developing.
ADGM: The Challenger
ADGM’s advantages are the advantages of a challenger that arrives later with different strategic priorities.
First, ADGM is backed by Abu Dhabi’s sovereign wealth. The emirate has deployed substantial resources to attract entities to ADGM, including subsidised office space, reduced registration fees, grants for technology companies, and regulatory incentives. The capacity to absorb short-term costs in pursuit of long-term ecosystem building is a luxury that only a jurisdiction backed by trillion-dollar reserves can afford.
Second, ADGM has positioned itself as the Gulf’s leading jurisdiction for digital assets and financial technology. The Financial Services Regulatory Authority (FSRA) of ADGM was among the first regulators globally to establish a comprehensive framework for virtual asset services, and the jurisdiction has attracted a concentration of crypto exchanges, digital asset custodians, blockchain companies, and DeFi platforms that DIFC has not matched.
This was a deliberate strategic choice. Rather than competing head-to-head with DIFC across all financial services categories — a contest that a twenty-year incumbent would likely win — ADGM identified an emerging category where no jurisdiction had established dominance and moved aggressively to claim it. The bet is that digital assets and fintech will grow to constitute a significant share of global financial activity, and that the jurisdiction that establishes regulatory leadership early will attract disproportionate share of the resulting business.
Third, ADGM benefits from proximity to Abu Dhabi’s institutional economy. ADIA, Mubadala, ADQ, ADNOC, and the other government-related entities that dominate Abu Dhabi’s economy are natural counterparties for the financial institutions based in ADGM. A fund manager setting up in ADGM can reasonably expect to build relationships with some of the largest institutional investors in the world, headquartered in the same city.
Legal Framework
Both ADGM and DIFC operate under English common law — a fundamental design choice that distinguishes them from the UAE’s onshore civil law jurisdiction. This means that commercial contracts, corporate governance, and dispute resolution within these centres are governed by principles familiar to any lawyer trained in London, Singapore, Hong Kong, or Sydney.
Both centres have their own court systems. The DIFC Courts, led by a Chief Justice and staffed by judges from leading common law jurisdictions, have a twenty-year track record. The ADGM Courts, similarly constituted, are newer but have been adjudicating cases since 2015 and have established a growing body of precedent.
The practical importance of the common law framework cannot be overstated. International financial institutions will not submit their commercial agreements to a legal system they do not understand or trust. English common law, with its emphasis on precedent, contractual freedom, and judicial independence, provides the legal infrastructure that makes these centres viable as international financial jurisdictions rather than merely domestic free zones.
Regulatory Comparison
The DFSA (DIFC’s regulator) and the FSRA (ADGM’s regulator) both operate under frameworks modelled on international standards. Both are members of the International Organization of Securities Commissions (IOSCO). Both apply risk-based regulatory approaches. Both license similar categories of financial activity.
The differences are in emphasis and pace.
DFSA has a longer track record and a deeper bench of regulatory staff. Its licensing process is well-established and familiar to international compliance teams. It regulates a broader range of activities, including a mature insurance sector and a deep banking licence base.
FSRA has been more aggressive in regulating emerging technologies. Its virtual asset framework, introduced in 2018 and progressively expanded, is more comprehensive than the DFSA’s equivalent. FSRA has also been more willing to engage with novel financial structures — tokenised assets, decentralised finance, digital securities — that traditional regulators have approached cautiously.
For a traditional bank or asset manager, DIFC remains the default regulatory choice. For a crypto exchange, a digital asset custodian, or a fintech company operating at the frontier of financial innovation, ADGM has a regulatory environment that is more accommodating and more clearly articulated.
Cost Comparison
The cost of establishing and maintaining a presence in each centre differs, and the differences matter — particularly for smaller firms, startups, and early-stage companies.
ADGM has historically offered more competitive pricing for company registration, regulatory licensing, and office space. Abu Dhabi’s willingness to subsidise ADGM’s growth has translated into fee structures that undercut DIFC, particularly for technology and innovation-focused firms. Hub71, the technology startup ecosystem adjacent to ADGM, provides additional incentives — including subsidised office space, housing allowances, and health insurance — that further reduce the cost of establishing a presence.
DIFC’s pricing reflects its incumbent status. Registration fees, regulatory licensing fees, and commercial rents are generally higher than ADGM’s. For large institutions — global banks, international law firms, major asset managers — the cost differential is immaterial relative to the value of being in the region’s established financial hub. For smaller firms, the differential can be decisive.
The cost dynamic is evolving. As ADGM grows and its subsidised incentives gradually phase out, the price gap may narrow. Conversely, DIFC has introduced new initiatives and pricing tiers designed to attract smaller firms and technology companies that might otherwise gravitate to ADGM.
Entity Growth Trajectories
Both centres are growing, but the rates and composition of growth differ.
DIFC’s entity count has grown steadily over two decades, accelerating in recent years. The centre added approximately 700 new entities in 2023 alone, bringing the total past 4,500. Growth has been broad-based, spanning banking, insurance, wealth management, fintech, and professional services.
ADGM’s growth has been faster in percentage terms — the centre has roughly doubled its entity count over the past three years — but from a much smaller base. ADGM’s growth has been concentrated in fintech, digital assets, and technology-adjacent financial services, reflecting its positioning as an innovation hub.
The composition of entities matters as much as the count. DIFC hosts the regional headquarters of virtually every major international bank, most global asset managers, and the leading international law and accounting firms. ADGM hosts a growing number of these institutions — partly through companies maintaining dual presences — but its entity base remains more weighted toward technology, venture capital, and digital finance.
Who Is Winning?
The question is poorly framed. Both ADGM and DIFC are growing. Neither is losing market share in absolute terms. The regional financial services market is expanding — driven by sovereign wealth deployment, private capital formation, regional corporate growth, and the influx of international firms establishing Middle Eastern operations — and both centres are capturing portions of that growth.
A more useful question is: what would each centre need to change to weaken the other? DIFC’s vulnerability is its relative conservatism on digital assets and innovation. If the future of financial services is substantially digital — and there are strong arguments that it will be — DIFC’s slower adoption of virtual asset regulation could allow ADGM to build an entrenched position in the fastest-growing segment of finance. ADGM’s vulnerability is its lack of institutional density. A fintech company that sets up in ADGM can access regulatory support and sovereign capital but may struggle to find the ecosystem of counterparties, advisers, and clients that DIFC provides.
The most likely equilibrium is continued coexistence with increasing specialisation. DIFC will remain the Gulf’s primary centre for traditional financial services — banking, insurance, conventional asset management, and the full-service professional ecosystem that supports them. ADGM will consolidate its position as the Gulf’s leading centre for digital finance, innovation-driven financial services, and the technology-enabled financial activities that are growing fastest.
For global institutions, the optimal strategy may be presence in both — a possibility that each centre would prefer to avoid but that the practical realities of the Gulf market make increasingly common.
The Bahrain Factor
Any analysis of Gulf financial centre competition must acknowledge the role of Bahrain, whose financial sector predates both ADGM and DIFC by decades. Bahrain’s comparative advantages — mature regulation, the presence of AAOIFI (the global standard-setter for Islamic finance), lower costs, and an established banking community — make it a third pole in the regional competition. But Bahrain’s limitations — small market size, fiscal stress, and the inability to deploy the capital that Abu Dhabi and Dubai can bring to bear — mean that it competes for a different segment of the market.
The Gulf is large enough and growing fast enough to support multiple financial centres, just as New York, London, and Singapore coexist in global finance. The question is not whether ADGM or DIFC will survive but what role each will play in the Gulf’s financial architecture as it matures. The answers are becoming clearer with each passing year.