Dubai regulator VARA sets new rules for digital asset issuance

Dubai’s Virtual Assets Regulatory Authority (VARA) has developed a rule book globally on how to codify digital assets, i.e., how to create, disclose, and distribute digital assets, or crypto, such as fiat-referenced virtual assets, ARVAs, or what is known as tokenized assets, as well as others, within a fully licensed environment.

The Virtual Assets Issuance Rulebook is what VARA called the world’s first dedicated regulatory Guidance on Virtual Asset Issuance. As per the press release, the Guidance complements VARA’s Virtual Assets Issuance Rulebook, offering market participants a practical reference for understanding how the issuance regime applies across different categories of virtual assets and different types of issuers.

As per the rule book, “All Entities in the Emirate of Dubai that issue a Virtual Asset in the course of a business, must comply with this VA Issuance Rulebook, as may be amended by VARA from time to time.”

VARA adds that it will assign categorizations to the issuance of certain types of virtual assets depending on the nature of the issuance and/or underlying business model associated with the virtual asset. The regulator may impose additional specific or nuanced requirements on such issuances, which, unless otherwise stated, will apply in addition to the requirement for the issuer to obtain a license and/or thereafter obtain prior approval from VARA of the whitepaper.

Approved versus non-approved assets

Approved virtual assets include Fiat-Referenced Virtual Assets (“FRVAs”); a VARA-approved fiat currency, the value of which an FRVA purports to maintain a stable reference to; b. which is controlled by a central bank of any country(ies) or territory(ies) which are not subject to any sanctions in accordance with Federal AML-CFT Laws.

However, VARA does not recognize AED stablecoins as they need the regulatory approval of the Central Bank of the UAE, nor does it recognize CBDCs or tokenized bank deposits used for interbank settlements. Currencies of sanctioned countries are not allowed.

Additionally, FRVAs can only be used for the purchase and/or sale of assets in the VA ecosystem and may not be used as a means of payment for goods or services within the UAE.

Also allowed are ARVA, which represents, or purports to represent, a direct right of ownership of the Reference Assets, or tokenized assets, RWAs.

VARA reiterates that issuing Anonymity-Enhanced Cryptocurrencies and all VA Activity(ies) related to them are prohibited in the Emirate.

VARA also talks about Category 2 virtual assets, where no license is required, but distribution must be carried out through a licensed distributor; these include Category 1 VA issuance or exempt VAs.

Finally, there are virtual assets that don’t need any requirements, such as non-transferable virtual assets, redeemable closed-loop virtual assets, or assets that can be redeemed or exchanged for goods, services, discounts, or purchases.

Matthew White, Chief Executive Officer, VARA, said, “Clear issuance standards are fundamental to building resilient and transparent Virtual Asset markets. This Guidance provides practical clarity on how VARA’s framework applies across different issuance models, ensuring that innovation is supported by strong governance, robust disclosures, and accountable market practices.”

The Guidance reinforces VARA’s commitment to disclosure-led regulation, requiring issuers to provide comprehensive whitepapers and risk disclosure statements that are clear, accurate, and accessible to prospective users. These requirements are intended to enable informed decision-making and promote greater transparency across the ecosystem.

It also clarifies the respective responsibilities of issuers and licensed distributors, particularly in the context of Category 2 issuances, where distributors are required to conduct due diligence and ongoing validation of compliance with the Rulebook.

Ruben Bombardi, General Counsel, VARA, added, “Trust is built through clarity, and clarity begins with disclosure. By strengthening the standards around how virtual assets are issued and communicated to the market, this Guidance reinforces Dubai’s position as a jurisdiction that enables responsible innovation while safeguarding market integrity.”

The Guidance further outlines expectations relating to governance, ongoing disclosure obligations, and the treatment of Asset-Referenced Virtual Assets, including requirements around Reserve Assets, redemption rights, and legal structuring.

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