Dubai's Virtual Assets Regulatory Authority (VARA) released a detailed guidance document on July 23 clarifying how token issuers should structure, disclose and distribute virtual assets in the emirate. The document is not new legislation but an interpretation of VARA's existing Virtual Asset Issuance Rulebook, offering clearer operational direction for different token types.
Three categories based on risk profiles
The core of the framework is a three-part classification system that separates token issuances according to structure and risk profile. Category 1 covers fiat-referenced and asset-referenced virtual assets, including stablecoins and RWA-style tokens. Category 2 applies to issuances that must be distributed through VARA-licensed intermediaries. Category 3 carves out exempt virtual assets with limited functionality, reducing compliance burdens for simpler use cases. Each pathway assigns clear responsibilities: in Category 2, licensed distributors are tasked with conducting due diligence and ensuring ongoing compliance, placing accountability on both issuers and distribution entities. The framework moves away from treating all tokens as uniform products, aligning oversight with how each asset functions in the market.
Stablecoins and asset-referenced tokens: reserve, redemption and legal structuring requirements
The guidance introduces specific provisions for stablecoins and asset-referenced tokens, setting expectations around reserve assets, redemption rights and legal structuring. Issuers must disclose reserve composition and redemption mechanisms to ensure payouts in extreme scenarios. The rules also require the governance structure of such tokens to be designed under Dubai law, minimizing cross-border legal conflicts.
Regulatory philosophy: moving beyond traditional securities law
VARA continues to build a bespoke digital asset regulatory framework, deliberately distancing itself from jurisdictions that rely on traditional securities or payments laws to govern token launches. The guidance notes that many virtual assets do not map neatly onto existing categories, hence the need for dedicated rules. By improving how risks and asset characteristics are disclosed to users, the framework supports informed decision-making.
VARA General Counsel: designed for informed decision-making
Ruben Bombardi, general counsel at VARA, told crypto media the regime offers “greater regulatory clarity,” as many virtual assets do not fit neatly into existing categories. He said the framework is designed to support “informed decision-making” by improving how risks and asset characteristics are disclosed to users. Bombardi's comments signal that Dubai's regulators prefer an information-based investor protection approach over simply replicating securities laws.
Earlier moves: expanding exchange framework to derivatives
Earlier this month, VARA expanded its regulatory framework for exchanges to cover crypto derivatives. Market observers see the token issuance guidance as the latest piece in Dubai's efforts to build a full chain of rules from primary issuance to secondary trading, potentially attracting more crypto projects looking to operate compliantly in the Middle East. However, VARA has yet to publish a compliance timeline or penalty framework, leaving the market waiting for further implementation details.