UAE Law and Practice Contributed by: Irina Heaver and Zainab Kamran, NeosLegal
outstanding tokens is required, with monthly external audit confirmation. The payment of interest or yield to token holders is expressly prohibited. Under VARA’s Virtual Asset Issuance Rulebook, issu- ers of FRVAs must maintain reserves of at least 100% of circulating supply in eligible reserve assets denomi- nated in the reference fiat currency, held in cash, cash equivalents or highly liquid low-risk instruments. Hold- ers must have a legally enforceable right to redeem at par within one business day with no fees charged. The grant of any interest, yield or other incentive ben- efit to encourage acquisition or holding of an FRVA is prohibited. In ADGM, the FSRA’s FRT framework similarly requires full reserve backing with strict composition criteria. A notable divergence from the CBUAE and VARA regimes is that the FSRA has elected not to prohibit FRTs from accruing and distributing income derived from reserve assets. However, the framework prohib- its the promotion of FRTs as an investment or savings product, which is intended to prevent issuers from competing on yield by taking on greater reserve risk. 6.2.4 Special Considerations The UAE regulatory frameworks do not currently designate any stablecoin or virtual asset as systemi- cally important, and there are no specific provisions addressing systemic risk in the stablecoin context beyond the general prudential and reserve require- ments described above. 7. Tokenisation and Real-World Assets 7.1 Treatment Onshore UAE VARA has introduced a dedicated framework for Asset-Referenced Virtual Assets (ARVAs) under the Virtual Asset Issuance Rulebook, which expressly captures tokens representing direct or indirect own- ership of real-world assets, including real estate, commodities, bonds and other financial instruments.
ARVAs are classified as Category 1 virtual asset issu- ances, requiring a VARA licence, a VARA-approved whitepaper, and compliance with the full suite of com- pulsory rulebooks. The CMA has taken a targeted approach to tokeni- sation through Resolution No 15/Chairman of 2025, introducing a framework for Security Tokens and Com- modity Contract Tokens. A Security Token is defined as a security whose rights are registered and transfer- able via a distributed ledger, with an equivalent defi- nition applying to Commodity Contract Tokens. The framework expressly excludes virtual assets falling within the VASP framework, and tokenised real-world assets are similarly excluded unless the token rep- resents a security or commodity contract. The CMA framework therefore covers tokenised equivalents of instruments already regulated as securities or com- modity contracts, but does not extend to the broader RWA tokenisation space. Financial Free Zones In ADGM, the FSRA regulates tokenised securi- ties as Digital Securities under the FSMR, applying the same requirements as those applicable to their non-tokenised equivalents. In the DIFC, the DFSA distinguishes between Security Tokens and Deriva- tive Tokens, regulating each in line with the underly- ing instrument. In March 2025, the DFSA launched a dedicated Tokenisation Regulatory Sandbox, provid- ing a structured pathway for firms to develop and test tokenisation models involving real-world assets under an Innovative Testing Licence. Market Practice The institutional RWA tokenisation market in the UAE is increasingly supported by specialist advisory plat- forms working with asset owners on end-to-end exe- cution. The leading UAE-based example is RWALabs. ae, which advises issuers, asset owners and institu- tional capital on regulatory structuring, legal architec- ture and go-to-market strategy for institutional-grade RWA tokenisation across the VARA, CMA and ADGM perimeters.
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