VARA Clarifies Token Issuance Framework for Virtual Assets in Dubai

This regulatory clarity enhances investor protections and positions Dubai as a leading global hub for virtual asset transactions.

• VARA published guidance on April 9, 2026, clarifying its token issuance framework into three categories based on risk and structure.
• Issuers must comply with new requirements for stablecoins and asset-referenced tokens, focusing on disclosures and investor protections.
• Industry reactions were positive, indicating a supportive environment for regulated tokenization and real-world asset issuance.

• VARA was established under Law No. 4 of 2022 to regulate virtual assets in Dubai, excluding the DIFC.
• The Virtual Asset Issuance Rulebook has evolved since its initial version, with the latest updates reflecting Dubai's ambition to be a global crypto hub.
• As of February 2026, there are 507 licensed virtual asset service providers (VASPs) under VARA, indicating a robust market landscape.

On April 9, 2026, VARA released a comprehensive guidance document that categorizes virtual asset tokens into three distinct tiers: Category 1, Category 2, and Category 3. This classification is pivotal for several reasons.

Category 1 includes fiat-referenced and asset-referenced virtual assets, which are subject to stringent requirements regarding reserves, disclosures, and redemption processes. This category is designed to protect investors by ensuring that issuers maintain adequate backing for their tokens, thereby reducing the risk of volatility and potential losses.

Category 2 pertains to issuances distributed via licensed intermediaries. These intermediaries are responsible for conducting due diligence on the tokens they distribute, ensuring that investors are informed about the risks associated with their investments. This layer of oversight aims to foster trust and transparency in the market.

Category 3 covers exempt low-functionality assets, which are less regulated due to their limited use cases. This category allows for innovation and experimentation in the virtual asset space while still maintaining a degree of regulatory oversight.

The guidance emphasizes the importance of detailed whitepapers that outline the risks associated with each token, which is crucial for informed decision-making by investors. Ruben Bombardi, VARA's General Counsel, highlighted that this framework is essential for providing clarity around bespoke assets that do not fit neatly into traditional categories. By categorizing tokens based on their structure and risk profile, VARA aims to create a more organized and safer environment for virtual asset transactions.

This regulatory update comes at a time when Dubai is solidifying its position as a global leader in the virtual asset market, with transaction volumes reaching approximately $680 billion in 2025. The clarity provided by VARA is expected to attract more issuers and investors to the Dubai market, further enhancing its reputation as a safe and regulated environment for virtual assets.

• Investors: Enhanced protections and clearer disclosures will directly impact investment decisions and risk assessments.
• Issuers: Companies looking to launch tokens must navigate the new compliance landscape, affecting their operational strategies.
• Licensed intermediaries: These entities will play a crucial role in distributing tokens, impacting their business models and revenue streams.
• Virtual asset service providers (VASPs): With 507 licensed VASPs, the guidance will influence how they operate and interact with clients.

• Market adoption of new categories: Monitor how quickly issuers adapt to the new framework and the types of tokens that emerge.
• Investor response to disclosures: Watch for trends in investor behavior as they react to the enhanced risk disclosures mandated by VARA.
• Regulatory developments in the region: Keep an eye on how other UAE jurisdictions might align their regulations with VARA's framework, potentially influencing broader market dynamics.