Dubai Officially Legalizes Real-World Asset Tokenization

The city's Virtual Asset Regulatory Authority (VARA) has issued updated rules that now officially allow issuing and listing RWA tokens on secondary markets

Dubai's Virtual Asset Regulatory Authority (ARVA) has been busy. The crypto regulator today announced Version 2.0 of its Rulebooks, tightening rules on margin trading, token distribution, and collateral wallet arrangements. Firms operating in the Web3 hub have until June 19 to comply with the new additions.

The updates to ARVA's capital market and broader crypto licensing regime come as the regulator prepares to introduce a new generation of crypto exchange licenses later this year.

The changes also follow a series of reports from CC Chain highlighting the growing interest in real-world asset (RWA) tokenization in Dubai.

Earlier this year, ARVA unveiled plans to allow issuers to mint and institutions to trade RWA tokens in a move that could finally bring the long-hyped tokenization narrative to fruition.

Now, the regulator has confirmed that it has updated its Virtual Asset Issuance Rulebook to officially permit the issuance and listing of RWA tokens, commonly known as Asset-Referenced Virtual Assets (ARVA).

The new rules, which come into effect on May 19, also place strict demands on issuers who want to launch ARVA tokens in Dubai.

To obtain a Category 1 license from ARVA, which is required for token issuers, firms will need to prepare a comprehensive white paper, publish a risk disclosure statement, and meet capital requirements of either 1.5 million AED (about $408,000) or 2% of the total reserve assets.

Issuers will also be subject to monthly independent audits and continuous regulatory supervision.

"This is a key development as it brings the issuing of real-world asset tokens and their listing on secondary markets, which is covered by ARVA's Exchange Rulebook, one step closer to becoming a regulatory reality in Dubai and the broader UAE market," said crypto lawyer Irina Heaver, who is based in the UAE.

"We can now officially say that issuers and platforms will need to comply fully with these changes by June 19, while the Exchange services will be granted at a later stage this year."

Compared to previous attempts to introduce security token offerings (STOs) in 2018–2019, which failed due to a lack of clear regulation and trading infrastructure, Dubai is now addressing these issues.

"It is also interesting to note that in other jurisdictions like Switzerland, there is still an open question about secondary trading of tokens even though the primary issuance is covered," added Heaver.

"But in Dubai, both issuance and secondary trading will be permitted and regulated, setting the scene for a vibrant and compliant token market ecosystem."