Dubai introduces a new regulatory model for digital assets, categorizing tokens into three groups and banning algorithmic and privacy coins.
These measures arrive amid the rapid growth of the sector and increasing institutional interest, as authorities seek to eliminate gray areas and impose a clear framework for different types of digital assets. The new model divides the market into three main categories, each with specific licensing and control requirements.
The first category covers tokens backed by assets such as real estate, gold, or private equity. These now require a special license, with regulators placing emphasis on the transparency of reserves and the link to the underlying asset.
The second group includes stablecoins pegged to fiat currencies, which are now treated as payment instruments and fall under the supervision of the central bank. This represents a significant shift that brings the crypto sector closer to the traditional financial system.
The third category—utility tokens—remains under lighter regulation but is still subject to enhanced disclosure requirements and investor protection standards.
Higher Barriers for Market Entry
The new framework significantly raises the requirements for companies. Minimum capital is now set at at least 1.5 million dirhams or 2% of the value of reserve assets, whichever is higher. Furthermore, companies must maintain a liquidity buffer covering at least 1.2 times their monthly operating expenses.
Regulators are also introducing strict requirements for local presence. Every company must appoint a UAE-based CEO, compliance officer, and anti-money laundering officer, all of whom are subject to approval by the CMA.
Focus on RWA Tokenization
In parallel with the new rules, VARA has completed the first phase of its pilot program for real estate tokenization. In the second phase, the regulator will test secondary trading capabilities, which is key to creating a liquid market for tokenized assets.
However, authorities also issued a warning to market participants against advertising such products without explicit regulatory approval, highlighting their intention to curb unregulated offerings.
Prohibitions and Enhanced Control
The new regulatory framework includes categorical bans. Algorithmic tokens, which rely on automated mechanisms to maintain price, are completely prohibited. Additionally, the issuance or trading of so-called “privacy” tokens, which conceal transactions, is not permitted.
Transparency requirements have also been significantly expanded. Issuers must undergo regular independent audits, and the smart contracts behind the tokens are subject to mandatory verification by approved cybersecurity firms before market launch.
These measures come as trading volume through licensed participants in Dubai reached approximately $681 billion ahead of the second quarter of 2026—a signal of a rapidly growing market that demands stricter regulation.
With this new regime, Dubai clearly states its ambition to position itself as a global hub for digital assets, but under conditions that increasingly resemble the standards of traditional financial markets.
