UAE Law and Practice Contributed by: Irina Heaver and Zainab Kamran, NeosLegal
Virtual Assets Regulatory Authority (VARA) VARA was established under Dubai Law No 4 of 2022 and is the competent authority for virtual asset activi- ties across the Emirate of Dubai, excluding the DIFC, pursuant to powers delegated by the CMA under Cabinet Resolution No 112 of 2022. Its regime is set out in the Virtual Assets and Related Activities Regu- lations 2023, as updated by VARA Rulebook Version 2.0 published in May 2025 and in force from 19 June 2025, and licenses seven VA Activities, namely advi- sory, broker-dealer, custody, exchange, lending and borrowing, payments and remittances, and manage- ment and investment services, together with VA Issu- ance as a separate authorised activity. Each activity is governed by a dedicated rulebook, supplemented by compulsory rulebooks on company, compliance, market conduct, and technology and information. In addition, VARA issues and enforces the Marketing Regulations governing all forms of virtual asset mar- keting, advertising and promotional activity directed at persons in the UAE, which apply on a UAE-wide basis. Financial Free Zones Abu Dhabi Global Market/Financial Services Regulatory Authority (ADGM/FSRA) The FSRA regulates financial services, including virtu- al asset activities, within the ADGM financial free zone under the Financial Services and Markets Regulations 2015 (FSMR). Virtual assets are treated as commodi- ties, with regulated activities including operating a Multilateral Trading Facility (MTF), dealing, custody, advising, managing and arranging, all requiring FSRA authorisation, supplemented by the FSRA’s Guid- ance on the Regulation of Virtual Asset Activities, most recently updated in June 2025. Only Accepted Virtual Assets may be offered to clients. The FSRA’s Fiat-Referenced Token (FRT) framework, in force from 1 January 2026, establishes a risk-tiered regime for fiat-backed stablecoin issuance, under which Paxos Issuance MENA and Universal Digital are licensed to issue USD-backed stablecoins. Dubai International Financial Centre/Dubai Financial Services Authority (DIFC/DFSA) The DFSA regulates financial services within the DIFC financial free zone under its own statutory framework, with virtual asset activities governed by the Crypto
Token regime introduced in 2022 and the Investment Tokens regime for tokenised securities. Only Rec- ognised Crypto Tokens may be used in DIFC finan- cial services. The DFSA’s Tokenisation Regulatory Sandbox, launched in 2025, supports firms develop- ing tokenised investment products such as equities, bonds, sukuk, fund units and other real-world assets, expressly excluding crypto tokens and stablecoins. Enhanced governance standards came into force on 12 January 2026, and the DFSA separately banned the use of privacy tokens on DIFC exchanges from January 2026. International Alignment The UAE has demonstrated a strong commitment to aligning with international regulatory standards. Under the Financial Action Task Force (FATF) guidance, the UAE has implemented a range of anti-money laun- dering and counter-financing of terrorism (AML/CFT) reforms, including mandatory Travel Rule compliance for all crypto firms, enhanced financial crime enforce- ment and improved international cooperation. All UAE virtual asset regulators require VASPs to comply with FATF Recommendations 15 and 16, covering virtual asset oversight and the Travel Rule respectively. At the broader international level, the UAE’s regula- tors have sought to implement the “same activity, same risk, same regulation” principle promoted by the International Organization of Securities Commissions (IOSCO) in its 2023 crypto and digital asset policy recommendations, with the DFSA and FSRA in par- ticular adopting frameworks that closely mirror their conventional financial services regimes. The UAE has also committed to the OECD Crypto-Asset Report- ing Framework (CARF), having signed the relevant multilateral agreement in July 2025, reflecting further alignment with international transparency standards. 2.2 Crypto-Asset Regulatory Frameworks Classification Each UAE regulator adopts its own definition of virtual assets, reflecting its particular regulatory mandate. At the federal level, the CMA defines virtual assets as digital representations of value that may be digitally traded or transferred and used for investment pur- poses, excluding digital representations of fiat curren- cies, securities or other funds. The CBUAE’s definition
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