Dubai regulator clarifies real-world asset tokenization rules: Lawyer

Dubai’s Virtual Asset Regulatory Authority (VARA) has issued updated guidelines for virtual asset service providers (VASPs), effective June 19, 2025. A key focus is the clarification of rules surrounding Real-World Asset (RWA) tokenization, previously a theoretical concept. These updated rules, part of the revised Virtual Asset Issuance Rulebook, establish a regulatory framework for issuing and listing RWA tokens, specifically defined as Asset-Referenced Virtual Assets (ARVA).

The new regulations address past shortcomings associated with Security Token Offerings (STOs), which lacked regulatory clarity and viable secondary market trading, ultimately hindering their success. Unlike STOs, ARVA tokens in Dubai now have a clear regulatory path. Regulated exchanges and broker-dealers are authorized to distribute and list them, solving a problem seen in jurisdictions where token issuance is permitted, but secondary trading remains unregulated.

ARVA tokens, under Dubai law, represent direct or indirect ownership of real-world assets, offering income entitlements and aiming for stable value pegged to underlying assets. They can be backed by, or derived from, real-world assets.

Issuers of ARVA tokens must meet stringent requirements to obtain a Category 1 Virtual Asset Issuance license. This includes a detailed white paper, risk disclosure statement, and a minimum paid-up capital of 1.5 million UAE dirhams (approximately $408,000) or 2% of held reserve assets. Ongoing compliance obligations include monthly independent audits and continuous supervisory oversight by VARA.

The updated regulations represent a significant shift from theoretical discussions to a practical, enforceable framework for RWA tokenization. This move positions Dubai as a leader in bridging the gap between traditional finance and blockchain technology, paving the way for broader institutional adoption of blockchain and virtual assets. The clarity provided by VARA’s new rules allows for the execution of RWA projects, transforming the previously theoretical concept into a regulatory reality.