What does VARA require to issue an asset-referenced virtual asset in Dubai in 2026?

In brief

• An asset-referenced virtual asset is a token tied to a real-world asset or an income stream that is not itself a security.
• Issuing one from Dubai is a Category 1 issuance, so the issuer needs a VARA licence and prior approval.
• VARA sets capital, backing, redemption, whitepaper and governance duties on the issuer.
• Whether VARA applies at all depends on the boundary with the Securities and Commodities Authority and the Central Bank.

What counts as an asset-referenced virtual asset under VARA

VARA's Virtual Asset Issuance Rulebook, in force since 19 June 2025, places an asset-referenced virtual asset in the same licensing tier as a fiat-referenced stablecoin. Both are Category 1 issuances. No issuer can place either token in Dubai as a business without a VARA licence and prior approval for that token. This is the classification that corporate lawyers in Dubai check first, because it decides whether a project needs a VARA issuance licence at all.

The rulebook defines an asset-referenced virtual asset, or ARVA, in wide terms. It covers any virtual asset, other than a fiat-referenced one, that references a real-world asset or an income stream. The definition reaches direct-ownership tokens, fractionalised tokens, wrapped tokens and derivative forms. Tokenised real estate, tokenised commodities and tokenised revenue participations sit inside it.

A fiat-referenced virtual asset works differently. It references a single VARA-approved fiat currency issued by a central bank. An ARVA references something else, an asset or a bundle of assets and rights. Where a project tokenises the economic rights in a venture rather than title to an asset, the perimeter turns on how those rights are characterised. We set out that split in our note on tokenising economic rights via an SPV.

Which regulator applies before VARA does

VARA regulates virtual assets across Dubai's mainland and its free zones, with one exception. It does not regulate the DIFC. Dubai Law No. 4 of 2022 sets that perimeter. Three questions decide whether an ARVA is even VARA's to regulate.

The first question is whether the token is a security or a commodity contract. A token that carries the rights of a share, a bond, a sukuk or a fund unit is a security. The Securities and Commodities Authority regulates that token, and VARA's issuance rulebook does not apply to it. Cabinet Decision No. 111 of 2022 placed security and commodity tokens with the Securities and Commodities Authority. The authority's Decision No. 15/RM/2025 now sets the rules. Those tokens must trade and settle on a market or an alternative trading system the authority licenses. The Central Bank makes the same point in its own rulebook, confirming that payment token services do not include security or commodity tokens.

The second question is whether the token is a dirham stablecoin used to pay for goods or services. The Central Bank regulates that instrument under the Payment Token Services Regulation, Circular No. 2 of 2024. VARA does not recognise a dirham stablecoin, so an AED-pegged payment token goes to the Central Bank.

The third question is where the issuer sits. The DFSA regulates virtual assets in the DIFC, and the FSRA regulates them in ADGM. An issuer inside either financial free zone follows that regime instead. We set out the DIFC fund route in our guide to launching a crypto fund in the DIFC.

What VARA approval requires from an ARVA issuer

VARA approves each ARVA separately under Annex 2 of the issuance rulebook, and the approval can come with conditions attached. A common condition requires the issuer to keep the issuance business apart from its other activities. Another requires an external licence where the issuer handles the underlying real-world asset. The issuer applies for approval before it issues. VARA treats the issuance as a business activity in every case.

Every ARVA issuer must publish a whitepaper and a risk disclosure statement. VARA applies enhanced disclosure requirements to Category 1 issuances. In its guidance published on 9 April 2026, VARA told issuers to rank the material risks and drop generic boilerplate disclaimers. The same guidance set a five-part standard for the legal opinion an issuer must obtain before launch. The guidance is a non-binding companion to the rulebook, so it explains how VARA reads its own rules rather than adding new law. Getting the whitepaper and the disclosure package right is close work, and we cover it in our note on structuring token holder rights and disclosures.

The rulebook sets the capital requirement, and the general service-activity table does not govern it. An ARVA issuer must hold paid-up capital of at least AED 1,500,000. Where 2 per cent of the average reserve value over the prior 24 months is higher, that figure applies instead. On top of that, the issuer must keep net liquid assets equal to at least 1.2 times its monthly operating expenses. The AED 1,500,000 figure is only a floor. An issuer usually holds more, because reserve values move and redemptions can arrive together.

VARA also expects governance in place from the start. The issuer must appoint two full-time responsible individuals who are UAE residents or passport holders, who pass VARA's fit-and-proper assessment, and who VARA approves. It must appoint a compliance officer as well. Every ARVA issuer also holds the base VARA licence, which we explain in our guide to VARA licence requirements and costs.

Reserve backing, custody and redemption

The backing an ARVA needs depends on what the token does. In its April 2026 guidance, VARA split ARVAs into two kinds for this purpose. A stable-value ARVA, which holds a value against a basket or a reference asset, must be fully backed by reserve assets. A direct-ownership ARVA works differently. Ownership of the underlying asset passes with the token, so it does not require reserve assets. The token is the asset rather than a claim on a separate pool.

Where reserve assets apply, the issuer must hold them with a licensed custodian and keep them segregated from its own funds. The reserve exists to meet redemption, so mixing it with corporate money defeats the purpose. Where the ARVA carries direct ownership, the issuer must establish that ownership in law. The underlying interest must transfer at the same moment the token transfers. Real estate title tokens fall into this second group, and we set out that structure in our note on real estate tokenization and SPV requirements.

Holders must be able to redeem. VARA requires the issuer to let a holder redeem an ARVA at par value, in AED or in the equivalent the whitepaper discloses. The issuer must process a redemption request within a reasonable time and charge nothing for it. A fiat-referenced token faces a tighter clock, with redemption due within one working day, but the principle is the same. A holder who cannot redeem on the disclosed terms has a claim against the issuer.

Significant ARVA issuers, ongoing duties and losing the licence

VARA treats some issuers as significant ARVA issuers. It applies enhanced governance, capital and reporting requirements to them. Every issuer, significant or not, reports to VARA on a continuing basis and keeps its disclosures current. The 2025 update also widened VARA's supervisory reach, giving it immediate access to premises, data, books and records, and the power to suspend an issuance.

VARA can revoke an ARVA issuance approval on three grounds. The first is a failure to issue the ARVA within six months of approval. The second is a whitepaper or marketing that carries misleading or inaccurate information. The third is a breach of the issuer's obligations in another jurisdiction. The regulator also bars anonymity-enhanced coins outright, so a privacy coin cannot be issued in Dubai at all.

Issuing without the licence carries its own exposure. We cover it in our note on operating a virtual asset business without a VARA licence. Where an approval or a licence is later challenged or withdrawn, the issuer needs dispute resolution lawyers in the UAE. They have to understand both the rulebook and the enforcement route.

How should issuers approach asset-referenced virtual asset issuance under VARA in 2026?

Asset-referenced virtual asset issuance in Dubai is a licensed activity with a hard entry point. The project needs a VARA licence and prior approval for the specific token. It needs a whitepaper that meets the enhanced Category 1 standard and capital above the floor. It also needs either full reserve backing or a clean transfer of ownership. None of that can be added after launch without going back to the regulator.

Classification is the first thing to settle. A token that looks like an ARVA may sit elsewhere. It can fall to the Securities and Commodities Authority as a security token, or to the Central Bank as a dirham payment token. The answer changes the entire licensing path. Deciding this after the token architecture is fixed is expensive, because the issuer often has to rebuild the structure. The April 2026 guidance is new, so anyone drafting a whitepaper should read its treatment of direct-ownership tokens and legal opinions first.

For sponsors, family offices and issuers building tokenised real-world asset products in Dubai, our corporate lawyers in Dubai map the token to the right regulator. They run the VARA approval and structure the reserve, custody and redemption terms before a filing goes in.

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