Legalization of RWA Tokenization in Dubai
Dubai has made a bold move in the digital asset arena by legalizing the tokenization and secondary trading of real-world assets (RWAs). On May 19, the city’s Virtual Assets Regulatory Authority (VARA) released a revised Rulebook, providing further detail on the regulation of virtual asset services (VASPs). Traders have until June 19 to act in accordance with the new rules.
Turning RWA Tokenization Into Reality
The updated framework allows the RWA tokenization process to move away from being theoretical and to become regulated and enforceable, according to Irina Heaver, UAE-based NeosLegal partner.
She explained that there is a clear regulatory framework in Dubai that now allows issuers to tokenize physical assets such as real estate and bonds and list them in a licensed secondary market.
New Classification and Trading of ARVA Tokens
Security token offerings (STOs) have tried to accomplish the same thing, but they were unsuccessful due to ambiguous regulations and lack of infrastructure. Dubai has officially classified RWAs as “Asset-Referenced Virtual Assets” (ARVA) in its new regulations. Asset-settled tokens are securities representing ownership or income rights associated with underlying real-world assets. They are now tradable on the platform under tight supervision.
Regulatory Requirements for Issuers
Issuers of ARVA tokens must meet specific requirements:
- Obtain a Category 1 Virtual Asset Issuance license.
- Publish a detailed white paper and risk disclosure.
- Hold capital of at least 1.5 million AED (~$408,000) or 2% of the reserve assets.
- Submit monthly independent audit reports.
- Comply with ongoing regulatory oversight.
A Complete Ecosystem for Blockchain Integration
Unlike places like Switzerland—where “second market trading” of these tokens is not regulated—Dubai offers a complete ecosystem for issuing, trading, and markets. This generates novel opportunities for institutional incorporation of blockchain technology in a compliant environment.
Conclusion: A New Chapter in Blockchain Finance
Dubai is now at the forefront of approved digital asset innovation with these landmark rules. By making the RWA tokenization concept a working reality, VARA has opened the door to a future in blockchain finance, where it will be more transparent, secure, and scalable.
