The Token is the Easy Part: What VARA Asks of Real-World Asset Issuers

Tokenised issuance in Dubai has moved past the pilot stage. In July 2026 VARA licensed a tokenisation platform as its 50th VASP, and in September it signed a memorandum of understanding with Securitize on regulated tokenised markets. The Dubai Land Department has run a real estate tokenisation pilot with VARA that included secondary-market testing.

For issuers, the rules that matter sit in VARA's Virtual Asset Issuance Rulebook and the Guidance on the Virtual Asset Issuance Rulebook published this year. Read together, they make one point. The hardest part of a tokenised issuance is the legal link between the token and the asset behind it, and that is where VARA's review concentrates.

Most real-world asset tokens issued from Dubai will need a VARA licence, and the time to approval depends mostly on the legal structuring done before the application goes in.

Most real-world asset tokens are Category 1

VARA sorts every issuance into Category 1, Category 2 or Exempt VA. Category 1 covers Fiat-Referenced Virtual Assets (FRVAs) and Asset-Referenced Virtual Assets (ARVAs). The issuer needs a VARA licence for Category 1 VA Issuance, plus VARA's approval of the whitepaper for each token before it is issued. Category 2 needs no issuer licence, but all placement and distribution must go through a Licensed Distributor, which becomes responsible for validating the issuer's compliance.

The ARVA definition is wide. It catches a token that represents ownership of a real-world asset (RWA), one that entitles the holder to income from an RWA, one that tracks an RWA's value, and any wrapped, fractionalised or derivative version of another ARVA. RWA includes real estate, precious metals, intellectual property, contractual rights and interests in financial instruments, including instruments that would be securities under the federal Capital Markets Authority's rules.

An issuer planning a token with a revenue share from a property, or one backed by a receivables pool, should therefore assume Category 1 from the start. Category 2 suits tokens with no RWA or income behind them. The category also has to be re-tested whenever the token's features change: if a change moves a token into Category 1, the issuer must hold the licence before the change takes effect.

Two kinds of ARVA, two different legal problems

VARA's guidance separates ARVAs that give holders direct ownership of the asset from ARVAs that hold a stable value against it. The structuring work for each is different.

A direct-ownership ARVA needs no Reserve Assets. Instead, the Issuance Rulebook requires the issuer to ensure that ownership is legally and validly established, that it passes when the token passes, and that any legal or regulatory steps for settlement or transfer of title are met. The issuer must also have measures in place for a token transfer that does not produce a matching transfer of the asset.

That last requirement is where most direct-ownership structures need the most work. Where title passes only on registration, with a land registry or a company register, the token transfer and the legal transfer are two separate events. The issuer has to show VARA how it closes that gap, and what holders can enforce if the gap opens.

A stable-value ARVA must hold Reserve Assets that are the same as, or closely related to, the reference asset. Under Issuance Rulebook, those reserves must be segregated from the issuer's estate, free of rehypothecation or encumbrances that would block redemption, and outside the reach of the creditors of the issuer and the custodian on insolvency. If the token offers redemption, holders must be able to redeem in AED. The issuer also publishes, at least monthly, the number and value of tokens in circulation, the value and composition of the reserves, and a statement on whether the token is fully backed.

Where issuances slow down

The whitepaper is the first pressure point. It goes to VARA for approval before the token is issued, and VARA's comments on it drive most of the review. An issuer may not exclude civil liability for anything in its whitepaper or other disclosures. The separate Risk Disclosure Statement must list risks material to that token, ranked by materiality, without generic boilerplate. Category 1 issuers must also describe their governance in detail, including who decides amendments to the token, reserves and redemption.

The legal opinion usually comes at the end. VARA may request one on any ARVA once it has reviewed the whitepaper, and an issuer holding Reserve Assets must provide one confirming segregation and insolvency protection. The guidance sets the standard: an external practising lawyer, not in-house counsel, with stated assumptions, covering the issuer's capacity, the token's classification, the enforceability of holder rights against the issuer, the assets and any other party, and whether third-party creditors can reach the assets. The opinion must be updated if the structure changes. Because it confirms what the whitepaper says, any change VARA asks for in the whitepaper flows into the opinion, so the structure needs to be settled before the whitepaper is submitted.

The order of work that holds up best is:

1. Classify the token against Category 1, Category 2 and Exempt VA, and record the reasoning.

2. Decide whether holders get ownership of the asset or a claim to its value.

3. Settle title, custody and any special purpose vehicle so that holder rights are enforceable and insolvency-remote.

4. Draft the whitepaper and Risk Disclosure Statement from the settled structure and submit them to VARA.

5. Prepare the legal opinion once VARA requests it.

What the next phase will reward

VARA's rules apply across Dubai's mainland and free zones, except the DIFC. Within that perimeter, the route for an RWA token is now written down. The issuances that reach the market quickly will be those that settled the legal mechanics before the application: who owns the asset, how title moves with the token, and what holders can enforce if the issuer fails.