Original source: VARA_EN_293_VER20250519
The Rulebook establishes a comprehensive issuance regime for Virtual Assets (VAs) across the Emirate of Dubai (excluding DIFC). It integrates prudential requirements, disclosure obligations, supervision powers, and technology-governance expectations for issuers—drawing heavily from securities-style frameworks while addressing crypto-specific risks.
1. Regulatory Purpose & Scope
VARA’s Issuance Rulebook governs all entities issuing Virtual Assets “in the course of a business.”
This includes commercial issuers, DAOs, non-profits, foundations, and tokenisation entities.
It sits alongside Dubai’s Virtual Assets and Related Activities Regulations 2023 and other VARA rulebooks (Company, Compliance & Risk, Market Conduct, Technology & Information).
Key implications for practitioners:
- Issuance activity is now regulated, not merely exchange or custody.
- Entities must evaluate whether their token issuance is considered business activity, even if non-profit or community-based.
- VARA retains sole discretion to classify and reclassify token types.
2. VA ISSUANCE CATEGORIES
VARA divides tokens into three categories, each with different regulatory burdens.
2.1 Category 1 – Regulated VA Issuances (Licence Required)
Applies to issuance of:
- Fiat-Referenced VAs (FRVAs) – stablecoins referencing fiat
- Asset-Referenced VAs (ARVAs) – tokens referencing RWAs, yields, baskets, asset values
- Any other VA VARA defines as Category 1
Licensing is mandatory and issuance becomes a regulated VA Activity.
Category 1 issuers must comply cumulatively with:
- Company Rulebook
- Compliance & Risk Management Rulebook
- Technology & Information Rulebook
- Market Conduct Rulebook
- PLUS annex-specific rules (FRVA or ARVA issuances)
Risk note:
VARA may revoke a licence for non-issuance within 6 months, false disclosures, breaches, insolvency, or cross-jurisdictional violations.
2.2 Category 2 – Unlicensed Issuances (But Must Use Licensed Distributor)
For tokens not qualifying as Category 1 or Exempt.
Issuance does not require a licence, but:
- All distribution/placement must occur through a Licensed Distributor (Broker-Dealer VASP).
- The Distributor is responsible for validating issuer compliance.
This is a major compliance obligation for Web3 projects intending to launch utility or governance tokens in Dubai.
2.3 Exempt VAs – No Prior Approval
Includes:
- Non-Transferable VAs (e.g., proofs, badges, SBT-like tokens)
- Closed-Loop Redeemable VAs (e.g., loyalty points redeemable in a closed network)
- Other types VARA may designate later
Issuers still remain subject to supervision and enforcement.
3. GENERAL PRINCIPLES (Applicable to All Issuers)
Set out in Part II.
Issuers must observe:
- Integrity, fairness, transparency
- Diligence and proper governance
- Adequate resources (technical, financial, operational)
- Clear communication and ongoing disclosures
- Legal/regulatory compliance (incl. consumer-protection laws)
- Environmental responsibility and climate-risk disclosure
This establishes a conduct-based regulatory regime, similar to EU/UK frameworks.
4. WHITEPAPER & DISCLOSURE REGIME (Part III)
A mandatory Whitepaper + Risk Disclosure Statement is required for all issuances except Exempt VAs.
4.1 Whitepaper Requirements (Schedule 1, pages 16–21)
Whitepapers must include detailed disclosures across six domains:
A. Issuer Information
- corporate structure, management, group links
- financial condition for past 3 years
- regulatory history, licenses, investigations
- governance frameworks
- relationship with DLT operators or affiliated entities
B. Virtual Asset Description
- token characteristics, functionality, roadmap
- compatibility with wallets
- supply mechanics, issuance schedules
- allocation strategy and treasury holdings
- use of proceeds
C. Rights & Obligations
- owner rights and limitations
- redemption conditions
- transfer restrictions
- liquidation / insolvency rights
- liquidity providers
- complaints & dispute resolution mechanisms
D. Underlying Technology
- DLT, consensus mechanism details
- smart contract audits
- environmental impact assessment
E. Licensed Distributor Information
(if Category 2 tokens distributed)
F. Public Offering Disclosure Requirements
- fundraising goals, pricing, allocations
- oversubscription rules
- refund mechanisms
- purchase methods
- conflicts of interest
Whitepapers must remain updated, version-controlled, and publicly accessible.
5. RISK DISCLOSURE STATEMENT
A standalone, non-technical document outlining all material risks, updated as needed and retained for 8 years.
6. SUPERVISION, EXAMINATION & ENFORCEMENT (Part IV)
VARA has broad powers to:
- suspend issuance
- halt further token minting
- mandate corrective actions
- conduct onsite/offsite inspections
- access all premises, data, and systems
- impose fines and penalties
Issuers must ensure VARA receives full access without breaching foreign laws.
7. FRVA (STABLECOIN) ISSUANCE RULES – ANNEX 1
For financial professionals, THIS is the most legally and operationally significant section.
7.1 Prohibition on AED-Pegged FRVAs
VARA states clearly that no AED-referenced stablecoin can be approved.
Such tokens remain exclusively regulated by the UAE Central Bank (CBUAE).
Strategic implication:
Any AED stablecoin project must go through CBUAE, not VARA.
7.2 Reserve Requirements & Backing
FRVAs must maintain ≥100% backing with eligible Reserve Assets:
- Cash/cash equivalents in reference currency
- Short-term government securities with ≤90-day maturity
- Repos ≤7 days
- Short-term government money market funds
Reserves must be:
- legally segregated
- bankruptcy-remote
- free from encumbrances
- accessible for redemptions within 1 working day
7.3 Redemptions
FRVA holders must have a legally enforceable right to redeem at par within 1 working day, with zero fees.
Disruptions may temporarily extend the timeframe, but only until settlement resumes.
7.4 Monthly Independent Audits
FRVA issuers must:
- commission monthly independent reserve audits
- publish monthly reserve composition & backing info
- issue statements confirming 100% backing
7.5 Capital Requirements
Issuers must maintain:
- AED 1,500,000 base capital
- + 2% of FRVA circulating supply value
7.6 Significant FRVA Issuer Classification
VARA may designate “Significant FRVA Issuers” based on:
- supply value
- reserve size
- transaction volumes
- interconnectedness with financial institutions
- operational complexity
Such issuers face enhanced governance, capital, and reporting requirements.
8. ARVA (ASSET-BACKED TOKEN) RULES – ANNEX 2
ARVAs include tokens that:
- represent claims on RWAs
- provide rights to income
- are stable relative to baskets of assets
- represent securitized, fractionalized, wrapped assets
Key obligations (mirroring FRVAs):
- detailed reserve asset frameworks
- redemption rights (where applicable)
- governance rules
- monthly disclosures & audits
- custody, diversification & segregation standards
For financial practitioners, ARVAs resemble tokenised securities or fund units, and VARA’s rules align with global asset-tokenisation regulatory trends.
TAKEAWAYS
1. VARA treats VA issuance as a fully regulated activity
Especially for stablecoins, tokenized assets, and any instrument referencing RWAs or value rights.
2. Token issuers must implement “issuer-level” governance
Mirroring requirements typically applied to financial institutions:
- risk frameworks
- transparency obligations
- conflict-of-interest controls
- clear investor disclosures
3. FRVA (stablecoin) issuers face stringent prudential & liquidity rules
This positions Dubai as a high-standard stablecoin jurisdiction
4. Category 2 issuers must partner with Licensed Distributors
This shifts compliance pressure toward intermediaries, impacting token launch strategies.
5. VARA uses a “substance over form” approach
Token functionality, economics, and rights—not terminology—determine regulatory category.
6. Environmental disclosures are mandatory
Unique among global VA regimes, climate impact reporting is explicitly required.
Practical Compliance Steps (Checklist)
For Category 1 issuers (FRVA/ARVA):
- Secure VARA licence
- Prepare detailed Whitepaper + Risk Assessment
- Set up reserve asset custody (segregated, bankruptcy-remote)
- Implement monthly audit processes
- Establish redemption mechanisms
- Draft governance, AML, technology, and risk policies
- Maintain minimum capital
For Category 2 issuers:
- Engage a Licensed Distributor (Broker-Dealer VASP)
- Draft full Whitepaper
- Implement consumer disclosures
- Establish governance & risk-management practices
For Exempt VA issuers:
- Comply with General Rules (integrity, fairness, environmental impact, etc.)
- Prepare to undergo VARA supervision
