Important definitions in this document
The definition of RWA in the official ARVA document is: RWA - in respect of any Virtual Asset, any type or combination of:
(a) interest in any financial instrument, scheme, or arrangement;
(b) physical and/or tangible asset; or
(c) intangible asset, rights or interest, other than—
i. the Virtual Asset itself; or
ii. items that exist in digital form only.
VASP - Virtual Asset Service Provider
VARA - Dubai Virtual Assets Regulatory Authority
ARVA - Asset-Referenced Virtual Assets
I. Regulatory landscape and core institutions for virtual assets
1. Dominant regulatory authority
Dubai Virtual Assets Regulatory Authority (VARA): established in March 2022, is the regulatory body overseeing cryptocurrency laws in Dubai. It will supervise the issuance, provision, and disclosure of virtual assets and NFTs, and collaborate with other federal bodies including the UAE Central Bank to establish ethical standards, general policies, and strategic plans.
Dubai Financial Services Authority (DFSA): is the regulatory body of the Dubai International Financial Centre (DIFC). The DFSA crypto token regime took effect on November 1, 2022, providing comprehensive requirements aimed at protecting users and potential users of financial services related to crypto tokens.
The two main regulatory authorities involve specific license types and business scopes as follows:
2. Regulatory framework
VARA Framework:
Laws and regulations: laws, cabinet resolutions, regulations, administrative orders and resolutions, federal anti-money laundering/anti-terrorism financing laws
Rulebook: mandatory rulebook, VA activity and other rulebooks
Guidance: 2024 virtual asset marketing and related activities regulatory guidelines
Documents: Administrative Orders No. 01/2022, Administrative Orders No. 02/2022
DFSA Framework
II. Specific regulatory requirements from VARA
1. Pre-approval for issuer issuance
1.1 Mandatory licensing requirements
ARVA issuance belongs to Category 1 VA Issuance (highest regulatory category), and the issuer must obtain a VA issuance license from VARA.
VARA license application process can refer to: https://web3caff.com/archives/105077
1.2 Individual asset approval
All VASP licensed by VARA for Category 1 VA issuance must obtain VARA's approval before issuing each ARVA. VARA may impose conditions on any approval for issuing ARVA at its discretion.
1.3 Reserve asset requirements
Must hold sufficient reserve assets to cover the rights and value represented by ARVA;
Reserve assets must be held by licensed custodians, independent of VASP's own assets;
Reserve assets must not be re-pledged or encumbered;
Ensure that reserve assets are legally separated from its property and any other virtual assets' reserve assets.
2. Information disclosure requirements
2.1 White paper disclosure
A white paper must be published disclosing relevant content before offering virtual assets to the public.
In addition to meeting general virtual asset disclosure requirements, ARVA must also meet additional disclosure requirements. Specifics are as follows:
General disclosure content mainly includes the following parts:
Information about the issuer
Information about virtual assets
Information about the rights and obligations associated with virtual assets
Information about underlying technology
Information about licensed distributors
Information regarding any initial offering of virtual assets to the public
Additional disclosure requirements for RWA mainly include the following parts:
ARVA value, rights, and value maintenance policy
Reference asset types and composition, selection criteria, variability, ownership association, stable anchoring, legal compliance, and risks
Existence, type, and composition of reserve assets, selection criteria, variability, and investment policy
ARVA supply management, including creation and destruction, impact on reserves
Holder's redemption rights, including redemption details, rule compliance, procedures, and timelines
Asset custody, including custody arrangements, liquidity guarantees, etc.
Risk management, including risk assessment, risk control measures, etc.
2.2 Ongoing disclosure requirements
Must disclose at least monthly in a clear, accurate, and transparent manner on its website:
The quantity and value of publicly circulating ARVA;
The value and composition of reserve assets (if applicable).
Confirm a statement indicating whether ARVA has sufficient reserve assets to provide adequate support at the time of disclosure.
3. Capital requirements
Licensed VASP issuing ARVA must always maintain paid-in capital at least equal to the higher of the following two:
AED 1,500,000 (approximately CNY 2,925,000);
2% of the average market value of reserve assets over the past 24 months.
4. Legitimacy requirements for ownership transfer
If ARVA represents direct ownership of RWA, the issuer must ensure:
Ownership is legally established, and RWA ownership is simultaneously transferred when the token is transferred;
Compliance with the legal settlement requirements for RWA transactions.
5. Redemption mechanism requirements
Must allow holders to redeem in AED or other forms of equivalent value disclosed in the white paper;
Redemption requests must be processed within a reasonable timeframe and without any fees.
6. Auditing and Reporting
Licensed VASP issuing VARA must appoint an independent third-party auditor and promptly notify VARA of the auditor's full name and contact information after the appointment;
The senior management of the VASP holding the ARVA issuance license must submit a proof of the accuracy of each independent audit to VARA as soon as possible after completion;
Independent audits of circulating ARVA and reserve assets every six months.
7. Multiple rule compliance
Issuers must also comply with the relevant requirements of the four core rulebooks:
(Company Rulebook)
(Compliance and Risk Management Rulebook)
(Technology and Information Rulebook)
(Market Conduct Rulebook)
III. DFSA Regulatory Dynamics
DFSA's Tokenisation Regulatory Sandbox was officially released by the Dubai Financial Services Authority (DFSA) on March 17, 2025. This guide marks the inclusion of RWA tokenization into the mainstream financial regulatory system in Dubai, providing a low-threshold, high-clarity, full-chain compliance path for global projects.
The sandbox program participation process is divided into two phases and four core steps, as follows:
Phase One: Submit Letter of Intent
Eligibility: Enterprises must engage in tokenization businesses (issuing/trading/holding/settling RWA, stocks, bonds, etc.), excluding cryptocurrencies and stablecoins; existing DFSA licensed entities may expand their business.
Application materials and timeline: zero fee for submitting the letter of intent. The window period is from March 17, 2025, to April 24, 2025 (late submissions must wait for the next round).
DFSA Assessment: Preliminary review of business compliance (whether it falls within the DIFC licensing scope). If passed, arrange a meeting to discuss business model details.
Phase Two: Innovative Testing License (ITL Tokenisation Cohort)
Entry into the ITL Tokenisation queue requires a DFSA license, and interested companies must apply and complete the authorization process to join the program.
ITL Pre-Application Form Link: https://services.dfsa.ae/make-anenquiry/innovation-and-testing-license/
The specific flowchart is as follows:
IV. Dubai real estate RWA case
