The UAE SCA (Securities and Commodities Authority) issues draft regulation for security and commodity tokens

The UAE Securities and Commodities Authority (SCA) has invited feedback on the draft regulation for security and commodity token contracts by February 14th 2025.

The UAE Authority has noted that security tokens include equity tokens, bond tokens, sukuk tokens while commodity tokens include examples of gold tokens, oil tokens and others.

Both security and commodity tokens are noted as being built on Blockchain/DLT platforms with security tokens representing financial or tangible assets and commodity tokens representing physical commodities.

The UAE SCA also noted that these tokens can be traded on virtual asset DLT platforms, with transfers of these tokens being subject to the provisions of the registration agreement.

The security token and the commodity token contracts may only be traded and settled through the market or the alternative trading system, while the trading and settlement of bonds and sukuks can be carried out over the counter.

UAE SCA and Dubai VARA coordinate on VASP regulations

In September 2024, The Securities and Commodities Authority (SCA) signed a cooperation agreement with Dubai’s Virtual Assets Regulatory Authority (VARA) where it was agreed that VASPs operating in/from Dubai, or wishing to service the emirate of Dubai required to obtain a license from VARA, and can be registered by default with the SCA to service the wider UAE. VASPs wishing to operate out of any other Emirates, must be licensed by the SCA to do so.

The UAE SCA security and commodity token regulation comes as the U.S. Securities and Exchange Commission’s (SEC) new leadership announced a task force to develop a regulatory framework for crypto assets, just one day after the president Trump’s s inauguration in an effort to redesign the crypto policy in the United States. Included in the responsibilities of the task force is to develop clear registration pathways for crypto assets, frameworks, and  clarity on when crypto tokens qualify as securities.

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