UAE Law and Practice Contributed by: Irina Heaver and Zainab Kamran, NeosLegal
1. Overview of Blockchain and Crypto- Assets 1.1 Blockchain 1.1.1 Evolution of Uses of Blockchain Blockchain activity in the UAE is now concentrat- ed around three principal use cases: virtual assets, namely licensed Virtual Asset Service Provider (VASP) operations, real-world asset (RWA) tokenisation and stablecoin issuance. VASP activity has matured significantly over the past 12 months, with all five UAE regulators, namely the Virtual Assets Regulatory Authority (VARA) in Dubai, the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM), the Dubai Financial Services Authority (DFSA) of the Dubai Inter- national Financial Centre (DIFC), the Central Bank of the UAE (CBUAE) and the federal Capital Market Authority (CMA), which on 1 January 2026 succeeded the Securities and Commodities Authority (SCA) under Federal Decree-Laws Nos 32 and 33 of 2025, hav- ing licensed a growing roster of issuers, exchanges, brokers, custodians and managers. More than 100 licensed entities are now active across these regimes. RWA tokenisation has moved into the execution phase, most visibly through the Dubai Land Depart- ment’s (DLD) tokenised real estate title initiative, which transitioned from pilot to a regulated 24/7 secondary market in February 2026, the VARA-DMCC Memo- randum of Understanding on commodity tokenisa- tion, and the DFSA’s Tokenisation Regulatory Sand- box covering equities, sukuk and fund units. VARA’s April 2026 Guidance on Virtual Asset Issuance has further clarified the treatment of Asset-Referenced Vir- tual Assets (ARVAs), distinguishing direct-ownership tokens from stable-value tokens for reserve purposes. Stablecoin issuance has been transformed by the CBUAE’s Payment Token Services Regulation (PTSR), with AED-referenced tokens including AE Coin, Zand AED, RAKBANK’s AED stablecoin and the IHC-led DDSC receiving approvals, USDU registered as the first foreign payment token, and ADGM’s FSRA oper- ating its Fiat-Referenced Tokens (FRT) framework, under which Paxos Issuance MENA and Universal Digital are licensed to issue USD-backed stablecoins.
Key issues for the next 12 months include scaling tokenisation infrastructure while preserving legal cer- tainty, the co-ordination of overlapping perimeters between the CMA, VARA and the CBUAE following the federal reset, the implementation of the OECD Crypto-Asset Reporting Framework (CARF), and the broader rollout of AED-backed stablecoins into com- mercial circulation. 1.1.2 Regulatory Sandbox CBUAE Sandbox In 2023, the CBUAE introduced the Sandbox Con- ditions Regulation, effective 15 April 2024, allowing Licensed Financial Institutions, including VASPs, to test innovative financial products, services and busi- ness models within a defined, supervised space and time frame. The regulation provides a temporary exemption from the licensing requirement, enabling participants to structure their business in compliance with regulatory standards while the CBUAE assesses the impact on its statutory objectives. Federal RegLab RegLab was established under Federal Decree-Law No 25 of 2018 on the Project of Future Nature and launched in January 2019 in partnership with the Dubai Future Foundation. Operating under the UAE Cabinet’s General Secretariat, it grants interim licenc- es to projects that either conflict with existing federal legislation or operate in areas where no legislation yet exists. A notable example is the fractional bonds pilot project carried out under the supervision of the CMA, aimed at facilitating the adoption of innovative finan- cial products and solutions. VARA VARA does not currently operate a formal sandbox programme but accommodates pilot initiatives on a case-by-case basis through co-ordinated regulatory engagement. The most prominent example is the DLD tokenised real estate title pilot, conducted jointly with the CBUAE and the Dubai Future Foundation through the Real Estate Sandbox, which permitted Ctrl Alt to develop and deploy on-chain title tokenisation infra- structure prior to the issuance of a full ARVA frame- work. The pilot, which ran from May 2025 to February 2026, channelled over AED18.5 million in tokenised property investments and served as the operational
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