UAE Law and Practice Contributed by: Irina Heaver and Zainab Kamran, NeosLegal
foundation for VARA’s May 2025 Asset-Referenced Virtual Assets (ARVAs) rulebook amendment. VARA has signalled continued openness to similar bespoke pilot arrangements where market innovation precedes
vacy tokens and algorithmic stablecoins, reflecting a calibrated effort to balance innovation with investor protection and financial stability. There are no specific regulations governing the use of blockchain technology in isolation, namely without the use of crypto-assets. Regulated firms deploying blockchain-enabled solutions remain subject to the general regulatory framework applicable to their sec- tor, including the outsourcing, operational resilience and technology governance requirements imposed by the relevant regulator. Where blockchain infrastruc- ture is provided by a third party, standard outsourcing obligations apply, and the regulated firm retains full responsibility for compliance, risk management and oversight of the service provider. The UAE’s federal data protection framework is estab- lished under Federal Decree-Law No 45 of 2021 on the Protection of Personal Data (PDPL), with sepa- rate regimes applying within ADGM and the DIFC. All three frameworks confer rights broadly analogous to the right to be forgotten, requiring that personal data be erased upon request in defined circumstances. 1.1.4 Smart Contracts Onshore UAE There are currently no specific laws or binding judicial decisions that define or expressly address the enforce- ability of smart contracts. To date, there appear to be no reported judicial decisions on the enforceability of such contracts. Financial Free Zones In ADGM, the legal framework similarly does not define or directly reference smart contracts. However, the Electronic Transactions Regulations 2021 recognise the legal validity of electronic contracts and records, which could support the use of coded arrangements provided they satisfy general contract formation prin- ciples. The DIFC has introduced limited legal recognition through the concept of a Coded Contract under its Contract Law. A Coded Contract is defined as an agreement composed entirely of Coded Terms exe- cuted by a computer program, with no natural lan- guage version. While this represents a step toward
regulatory codification. ADGM FSRA RegLab
ADGM launched its Regulatory Laboratory (RegLab) in November 2016 as a tailored regulatory frame- work for innovative financial technology businesses. It allows new and existing firms to test innovative financial technologies in a controlled environment for up to two years under a customised set of regulatory requirements. At the end of this period, participants may transition to full authorisation or exit if not ready to scale. DIFC DFSA Tokenisation Regulatory Sandbox In March 2025, the DFSA launched a dedicated Tokenisation Regulatory Sandbox to support firms developing tokenised investment products and ser- vices. The initiative forms part of the DFSA’s broader Innovation Testing Licence (ITL) programme and oper- ates in two stages: an expression of interest stage, during which firms submit proposals for tokenisation- related innovations; and an ITL tokenisation cohort, in which selected firms test their products in a controlled environment with bespoke regulatory guidance. Suc- cessful participants may progress to full licensing. The framework is tailored to support safe experimentation while preserving market integrity. 1.1.3 Regulation of Blockchain Technology The UAE has adopted a broadly pro-innovation stance towards blockchain and crypto-assets, posi- tioning itself as a global hub for the industry. This is best illustrated by the creation of VARA, the world’s first dedicated standalone virtual assets regulator, the modernisation of the federal capital markets frame- work through the establishment of the CMA, and the proliferation of regulatory sandboxes across federal and financial free zone jurisdictions. Several major crypto industry players, including Binance, Crypto. com, OKX, Bybit, Kraken and BitGo, have established a regulated presence in the UAE as a result. The regulatory approach is not without limits. Certain asset classes are expressly prohibited, including pri-
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