Dubai’s Virtual Asset Regulatory Authority (VARA) has rolled out updated guidelines aiming to demystify the burgeoning realm of real-world asset (RWA) tokenization. On May 19, the release of the revised Rulebook for virtual asset service providers (VASPs) brought fresh clarity to issuers operating in this vibrant crypto hub. The deadline for compliance with these new directives is set for June 19, a mere month away.
Tokenization Takes Center Stage
According to Irina Heaver, a partner at the UAE-based law firm NeosLegal, these guidelines transform theoretical discourse into regulatory action. “Issuing real-world asset tokens and listing them on secondary markets is no longer theoretical,” Heaver remarked. “It’s now a regulatory reality in Dubai and the broader UAE.” This regulatory shift aims to legitimize RWAs, offering a “viable” path as Heaver puts it, for institutional adoption of blockchain technology and virtual assets. This follows a pattern of institutional adoption, which we detailed in our coverage of the world’s largest $3B RWA tokenization deal.
RWAs have been likened to the earlier wave of security token offerings (STOs), which fizzled out quietly between 2018 and 2019 due to a lack of regulatory clarity and market infrastructure. In contrast, VARA’s revised rules, which categorize RWAs as Asset-Referenced Virtual Assets (ARVA) tokens, provide a robust framework for their issuance and distribution.
Bridging Regulatory Gaps
VARA’s updated Rulebook is designed to address previous shortcomings head-on. Regulated exchanges and broker-dealers in Dubai can now distribute and list ARVA tokens, a move that could solve issues seen in jurisdictions like Switzerland, where token issuance is possible but secondary trading remains a regulatory grey area. These changes underscore Dubai’s commitment to fostering a secure and growth-oriented environment for blockchain adoption.
Heaver further clarified that under Dubai law, ARVA tokens are defined as representing ownership of tangible assets, granting income rights, and maintaining value stability through real-world asset references. These tokens are backed by such assets or constitute derivatives thereof, paving the way for more structured tokenization initiatives. For a deeper dive into the regulatory implications, see our coverage of Tether’s tokenization ambition.
Navigating the New Landscape
Issuers of these tokens must navigate a regulatory landscape that demands rigorous compliance. They are required to obtain a Category 1 Virtual Asset Issuance license, present a comprehensive white paper, and disclose associated risks. Furthermore, a minimum paid-up capital of 1.5 million UAE dirhams (approximately $408,000) or 2% of reserve assets is mandated. Continuous independent audits and supervisory oversight are also part of the equation, ensuring transparency and accountability.
“VARA is providing regulatory clarity, and it’s giving the industry a viable, enforceable path to turn the hype of RWA tokenization into reality,” Heaver emphasized. This shift marks a significant move from speculative discussions to actionable frameworks, a change that could potentially catalyze institutional interest and participation.
Looking Ahead
As the deadline for compliance looms, the crypto industry in Dubai is abuzz with anticipation. The implications of these new rules are vast, potentially setting a precedent for other jurisdictions grappling with the complexities of asset tokenization. However, the journey is fraught with challenges. The industry’s ability to adapt and meet these regulatory demands will be crucial in determining the success of RWAs.
With VARA’s update, Dubai continues to assert itself as a global leader in the crypto and blockchain space, raising questions about whether other countries will follow suit. The dialogue around RWAs is no longer just theoretical; it’s a burgeoning reality. The next few months will be pivotal, as stakeholders assess the practical impact of these regulatory changes on the market landscape.
Source
This article is based on: Dubai regulator clarifies real-world asset tokenization rules: Lawyer
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
