REAL – WORLD ASSETS TOKENISATION IN DUBAI, UAE

Dubai is turning “things you can touch” into “tokens you can trust” – but only if you do it the Dubai way. In this guide, we’ll walk through how Real-World Assets (RWAs) – think property interests, trade receivables, commodities, fund interests, or income streams – can be tokenised under Dubai’s Virtual Assets Regulatory Authority (VARA) framework, what approvals you actually need, and the practical guardrails that will make (or break) your launch.

We’ll keep this punchy and conversational, but precise – citing the rules you’ll be judged against.

1) FIRST PRINCIPLES: WHICH RULES APPLY TO RWA TOKENS?

Under VARA’s VA Issuance Rulebook (May 19, 2025), RWA-linked tokens sit in the Asset-Referenced Virtual Assets (ARVA) bucket. Issuing an ARVA is a Category 1 VA Issuance, which means it’s a regulated VA Activity and you need a full VASP licence covering Category 1 before minting. In addition to the VA Issuance Rulebook, issuers must comply with the Company, Compliance & Risk Management, Technology & Information, and Market Conduct Rulebooks.

Not every “stable” token is a VARA token

Fiat-Referenced Virtual Assets (FRVAs) – stablecoins pegged to fiat – also live inside the VA Issuance Rulebook, but there’s a bright line: anything pegged to the UAE dirham (AED) is outside VARA and under the Central Bank (CBUAE) Payment Token regime. VARA’s own rules spell this out twice: FRVAs are not issued for use as a means of payment in the UAE, and AED-referenced issuances are not approved under the FRVA rules (they remain under the sole and exclusive purview of CBUAE).

In practice:

• “Payment tokens” for buying goods/services in the UAE → CBUAE Payment Token Services Regulations 2024 (merchants in the UAE may accept only a Dirham Payment Token or specific Foreign Payment Tokens when used to buy VAs or VA derivatives).
  
• RWA-backed instruments (e.g., real estate interests, gold, credit) tokenised for investment/holding/trading as Virtual Assets → VARA ARVA rules.

2) ARVA AT A GLANCE: WHAT YOU’RE ACTUALLY ISSUING

An ARVA references real-world assets and/or “Income” approved by VARA as the token’s “Reference Assets.” The Rulebook defines terms, and a dedicated Annex 2: ARVA Issuance Rules sets the extra hoops for approval, disclosures, reserves, redemptions, audits, marketing, and capital.

Key takeaway: every ARVA issuance needs its own approval (project-by-project), even after you’re Licensed, and VARA can attach bespoke conditions.

3) THE APPROVAL PATH (AND THE “SIGNIFICANT ISSUER” SWITCH)

Project-by-project approval

Licensed VASPs must obtain prior approval for each ARVA they intend to mint or list. VARA may add conditions – e.g., segregating issuance operations, requiring extra opinions, or capital add-ons – when it grants an approval.

“Significant ARVA Issuer”

VARA can designate you a Significant ARVA Issuer based on metrics like circulation size, value of reserves, volumes, or interconnectedness, and then dial up governance, reporting, and prudential expectations.

Pro tip: Build like you’ll be “Significant” on day one; it’s far easier than back-fitting controls under pressure.

4) WHAT VARA EXPECTS IN YOUR WHITEPAPER (AND AFTER)

Initial Whitepaper – additive content for ARVAs. Beyond generic Issuance content, ARVAs must cover (among others):

• The rights/value the ARVA grants;
• The type, composition and change mechanics of the Reference Assets (RWA/Income);
• Ownership/fractionalisation mechanics;
• Custody for Reference and (if applicable) Reserve Assets, and how you ensure timely access to process redemptions;
• Creation/destruction policy and its effect on Reserve Assets;
• Redemption rights, procedures and timelines;
• Risk analysis (credit, market, liquidity, counterparty) and how you manage those risks.

Ongoing monthly disclosures (public website). At least monthly you must disclose:

• Number and value of ARVAs in public circulation;
• Value and composition of Reserve Assets (if applicable); and
• An explicit statement whether the ARVA is fully backed in line with the reserve rules.

5) THE RESERVE ENGINE ROOM: BUILD IT LIKE A BANK TREASURY (ONLY PUBLIC)

If your ARVA purports to maintain a stable value relative to Reference Assets, you must hold sufficient and acceptable Reserve Assets to secure the rights/value of holders and to mitigate liquidity risks associated with redemption rights.

Minimum operating standards include:

• Qualified custody for Reserve Assets;
• Segregation from your own funds and bankruptcy-remoteness (no rehypothecation or encumbrances);
• Prompt accessibility of reserves to process redemptions (including conversion into AED where paid in AED);
• Regular risk assessments of the composition of reserves.

VARA also reserves the right to ask for a legal opinion confirming the statutory segregation/bankruptcy-remoteness requirements are achieved.

6) REDEMPTIONS: RIGHTS, TIMING, AND ZERO FEES

If your ARVA provides holders a redemption right, you must ensure holders can redeem for an equal value denominated in AED (and any other forms you disclose). Redemptions must be available against the issuer (or directly in respect of the Reserve Assets if you can’t process them), and all valid redemption requests must be completed within a reasonable period – no fees may be charged. Written policies and procedures are required.

This “reasonable period” standard recognises RWAs can settle off-chain and have market frictions; your operational runbooks (and Reserve Asset composition) must be designed to meet it in normal and stressed conditions.

7) AUDITS AND ATTESTATIONS: SET THE CADENCE BEFORE LAUNCH

ARVA issuers must:

• Every six months commission an independent audit of (i) number and value of ARVAs in circulation and (ii) composition and value of Reserve Assets (if applicable); and
• Commission an annual financial-statement audit (with the report available to VARA upon request).
• Senior management must attest to the accuracy of each independent audit.
  

8) MARKETING: WORDS MATTER (AND SO DO DISCLAIMERS)

In Dubai, you cannot market a VA using the term “stablecoin” (or imply price stability against an RWA) unless:

• you are a VASP Licensed by VARA to issue ARVAs and still approved,
• the ARVA references one RWA only, and
• you maintain Reserve Assets per Rule III.C.

All ARVA marketing must also state that the ARVA is not covered by investor-protection or deposit guarantee schemes.

Also note the Issuance Rulebook’s general prohibition on anonymity-enhanced/pseudonymous assets (don’t design privacy features that would breach the baseline).

9) CAPITAL: THE FLOOR AND THE FORMULA

ARVA issuers must always hold Paid-Up Capital equal to at least the higher of:

• AED 1,500,000, and
• 2% of the average market value of Reserve Assets (where applicable), calculated over the prior 24 months.

Design your treasury so this percentage doesn’t spike unexpectedly (e.g., if reserves balloon with supply growth or price movements).

Side-note on CBUAE Payment Tokens (if your use-case is “means of payment”): CBUAE imposes its own prudential regime, including regulatory capital tiers (≥ AED 3m or 1.5m based on transfer volumes) and stringent reserve coverage and monitoring. If you are building a Dirham Payment Token or payment rails, model these Central Bank requirements – don’t assume VARA’s prudentials apply.

10) GOVERNANCE AND THE “IN-THE-COURSE-OF-BUSINESS” TEST

All of the above applies when you issue “in the course of business” in the Emirate – i.e., a professional issuance activity rather than a once-off personal transfer. You must meet all applicable Rulebooks (corporate governance, compliance/AML, tech & cybersecurity, market conduct), plus the ARVA Annex extras. VARA can also tailor conditions on approvals. Build your governance and documentation (“board-grade” policies, clear R&R across Risk/Treasury/Tech/Compliance, and escalation matrices) to reflect that reality.

11) PRACTICAL BUILD CHECKLIST (THIS IS WHAT GOOD LOOKS LIKE)

Structuring & legal pack

• Map the Reference Assets and show how the token’s value/rights are derived. If the token represents direct ownership (or fractions), ensure title-transfer mechanics comply with sectoral laws (e.g., real estate, securities, commodities). Your Whitepaper must explain all of this.
• Prepare the legal opinions VARA can require – e.g., on segregation/bankruptcy-remoteness of reserves and on Whitepaper statements.

Reserve & treasury architecture

• Diversified, high-quality Reserve Assets with qualified custodians and multi-custody design; daily visibility on reserve-to-supply ratio and stress testing for redemption clusters.
• No rehypothecation or encumbrances, and prompt access to meet redemptions (including AED conversion where relevant).

Redemptions & operations

• Codify who can redeem, how, and when; design queues and liquidity buffers to hit the “reasonable period” obligation, and zero fees. Logs must evidence compliance.

Disclosure & audit cadence

• Ship a monthly public dashboard with supply and reserve composition (plus a “fully backed?” statement). Layer in semi-annual independent audits of supply/reserves and annual financials with management attestations.

Marketing & client protection

• Only use “stablecoin” if you tick the ARVA conditions; always include no-guarantee disclaimers in ads. Coordinate with the Marketing Regulations.

Capital

• Model the AED 1.5m / 2% of average reserves requirement with buffers – especially if reserves (and therefore capital) can trend upward with adoption.

12) COMMON DESIGN TRAPS (AND HOW TO AVOID THEM)

1. Calling it a “stablecoin” when it isn’t. If your ARVA references multiple RWAs, or you don’t meet Reserve Asset standards, you can’t use “stablecoin” in marketing. Use precise language: “RWA-referenced token” with clear volatility/reserve disclosures.
   
2. Blurring payment use-cases. If you intend your token to pay for goods/services in the UAE, you’re in CBUAE land, not VARA. Align the business model early.
   
3. Under-building the reserve rail. Not being able to honour redemptions fast enough (or charging fees) is a red flag. Architect liquidity to meet the “reasonable period” obligation.
   
4. Forgetting the “Significant Issuer” escalator. Your success can raise the bar – so build governance, reporting, and risk management with that in mind from day zero.

13) WHERE ARVAS SHINE

• Fractional access to traditionally illiquid assets (e.g., revenue-sharing on infrastructure projects, bullion custody receipts, or regulated fund interests).
• Transparent reserves with on-chain supply telemetry and monthly proof-of-backing statements, building trust with sophisticated allocators.
• A rules-based, approval-per-issuance framework that gives investors clarity about what exactly they’re buying.

HOW CRYPTOVERSE LEGAL CAN HELP

We design, license, and operationalise RWA tokens that pass regulator review the first time. Our Dubai-based team translates VARA’s ARVA Annex into concrete build artefacts – issuance packs, reserve/legal opinions, treasury playbooks, whitepapers, monthly disclosure dashboards, and marketing guardrails – so you can ship with confidence. We also benchmark models against CBUAE requirements where payment flows touch Dirham rails, and help you future-proof for “Significant Issuer” scrutiny. If you’re tokenising property, commodities, or income streams, we’ll get you regulator-ready with pragmatic, scalable controls.

(If you’d like, we can tailor a scoping memo comparing ARVA vs. FRVA vs. Payment Token routes for your exact use-case.)

Dubai’s proposition is simple: innovate boldly, but with real safeguards. The ARVA rule-set pairs predictable approvals with serious obligations around reserves, redemptions, disclosures, audits, capital, and marketing precision. Get those right, and you’ll operate in one of the world’s most forward-leaning tokenisation jurisdictions – with investor-grade credibility baked in.

Legal notice

This article provides a general overview and does not constitute legal advice. Regulatory outcomes turn on specific facts, structures, and counterparties. Seek formal counsel before making licensing or product decisions under VARA or CBUAE frameworks. 

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