Issuing a property token in Dubai: VARA's rulebook for issuers

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Kooky

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A token that stands for a share of a building is, for Dubai's virtual asset regulator, a regulated product before it is a property product. The firm that creates it and the firm that sells it each fall under written rules, and those rules are public. They sit in the rulebooks of the Virtual Assets Regulatory Authority (VARA), the body that licenses virtual asset activity in the Emirate of Dubai.

This guide reads those rules from the side of the firm. It covers the Virtual Asset Issuance Rulebook and its annex on asset-referenced virtual assets, the part of the Broker-Dealer Services Rulebook that governs distribution, the fee schedule of VARA's Regulations and the Marketing Regulations of 2024. It does not judge whether tokenised property is a sound product: a rulebook does not answer that question.

VARA: Annex 2 of the Virtual Asset Issuance Rulebook (in force from 19 June 2025) and the Broker-Dealer Services Rulebook dated 19 May 2025.

Where a property token sits in VARA's categories

The Virtual Asset Issuance Rulebook, in the version VARA lists as effective from 19 June 2025, sorts every virtual asset issued in the Emirate into one of three groups. Rule I.C.1 sets them out, and the group decides what a firm must do before a single token exists.

The group that matters for property is the asset-referenced virtual asset, shortened to ARVA. The rulebook's definitions describe it as a virtual asset that is not a fiat-referenced one and that, among other things, represents ownership of real-world assets or an entitlement to income from them, or aims to hold a stable value by reference to such assets or income.

A real-world asset is defined widely. It includes any physical or tangible asset, and any interest in a financial instrument, scheme or arrangement. Income is any value that originates from such an asset: sales proceeds, interest, dividends, profits, repayments.

The text of the rulebook read for this guide does not use the words real estate or property. A building is a physical asset, and rent and sale proceeds are income that originates from it, so a token that carries a share of either fits the words of the definition. The classification itself belongs to the regulator. Under Rule I.C.2, VARA looks at the nature of the asset, the rights or value it represents and the business model behind it.

Who the rulebook covers, and who it leaves out

The rulebook applies to entities in the Emirate that issue a virtual asset in the course of a business. Each term has a boundary.

The place. The rulebook defines the Emirate as every zone of Dubai, special development zones and free zones included, with one exception: the Dubai International Financial Centre. The pages read do not describe the rules that apply there.

The business test. Rule I.A.2 gives VARA sole discretion to decide whether an issue is made in the course of a business. The regulator may weigh how the entity presents itself, how regular and how large the issuance is, and whether anyone is paid. Not-for-profit and charitable bodies are expressly included, and an entity may be an individual as well as a company. Two fixed points frame the test. A Category 1 issue is always treated as business. An issue outside Category 1 made solely for personal, non-commercial use may fall outside it.

The exempt tokens. Two kinds of token need no approval. A non-transferable virtual asset is one the issuer does not sell, that cannot be redeemed for money or value in kind, and that cannot move between wallets. A redeemable closed-loop virtual asset can be redeemed only for goods, services or discounts with the issuer or named merchants, and cannot be sold for money or used as payment outside that loop. Under Rules I.F.1 and I.F.2 the issuers of exempt tokens still owe the general duties of Part II and stay under VARA's supervision, but Rule III.A.2 frees them from publishing a whitepaper or a risk statement.

The banned token. Rule I.B.1 prohibits the issue of anonymity-enhanced cryptocurrencies, with or without a licence.

The licence, and what comes attached

Issuing an ARVA is a Category 1 VA Issuance, and Rule I.D.1 reserves that activity for entities VARA has licensed for it. The licence is not a single text to comply with. Rule I.D.2 brings four more rulebooks with it: the Company Rulebook, the Compliance and Risk Management Rulebook, the Technology and Information Rulebook and the Market Conduct Rulebook. Where two rules cover the same ground, Rule I.D.3 says the higher standard applies.

Part II adds six general duties that bind every issuer, licensed or not: integrity and fairness, due diligence, adequate resources, clear and timely disclosures, compliance with all applicable laws, and environmental responsibility.

A licence can also be withdrawn. Among the grounds in Rule I.D.7 is a plain deadline: the virtual asset is not issued within six months of approval. Rule I.D.8 obliges the firm to tell VARA at once when a ground for revocation arises.

Under Part IV, VARA may require an issuance to be suspended, impose conditions and take enforcement action, fines included. An issuer must give VARA immediate access to its premises, data and records.

Approval, one token at a time

The licence authorises the activity. It does not approve any particular token. Rule I.B.2 of the ARVA Rules, the second annex of the Issuance Rulebook, says that a licensed firm must obtain VARA's approval before issuing each ARVA.

Reference Assets are the real-world assets or income that the token represents, as approved by VARA. Under Rules III.A.1 and III.A.2 of the annex, the issuer must show VARA the rights or value the token grants, how it derives and keeps its value, and the type and composition of the Reference Assets.

VARA may attach conditions to an approval. Rule I.B.3 gives examples that matter for property. The regulator may require the firm to separate its issuance from its other activities through enforced policies. It may require the firm to obtain and keep every regulatory approval and licence needed for activities involving the real-world asset itself. Rule I.B.4 goes further: VARA may impose extra rules on a given token or firm, or disapply rules of the annex. The conditions of each approval complete the published text.

Under Part I, Section C of the annex, VARA may also designate a firm as a Significant ARVA Issuer, looking at factors such as the number of holders, the value in circulation and the firm's links with licensed financial institutions. A designated firm may face additional rules on governance, capital, insurance, audits and reporting. The annex sets no numeric threshold.

The whitepaper: what has to be in it

The whitepaper is the central document of an issue, and the rulebook treats it as a legal disclosure, not as a brochure. Rule III.B.4 requires it to be published before the token is offered or marketed to the public. Rule III.B.1 requires its content to follow Schedule 1 and to sit in one accessible, machine-readable location.

Schedule 1 groups the minimum content under headings. The first is the issuer: its legal structure, its parent company, the people who own and manage it, any convictions of those involved for dishonesty, fraud or financial crime, its governance, and its financial condition over the past three years, or since registration if that is shorter. The second is the token: its characteristics, its target market, the trading platforms where admission is sought, the total number to be issued and the planned use of the proceeds.

The third heading, on rights and obligations, is where a property token has most to explain. It covers the rights of owners and how they can change, later issues that could dilute the token, any restriction on transfer and any step needed to give legal effect to a transfer, redemption, the complaints procedure, and the applicable law and competent court. Further headings cover the technology and identify the Licensed Distributor, with its VARA licence number.

Where there is a public offer, the whitepaper must give the amount to be raised in dirhams with minimum and maximum targets, say whether oversubscription is accepted, and carry a specific notice that buyers are refunded if the minimum target is missed or the offer is cancelled, with the mechanism and the expected timeline. It must also state the issue price, how funds are safeguarded during the offer and the expenses charged to buyers.

For an ARVA, Rule II.A.1 of the annex adds a second list. The whitepaper must say whether the token gives direct ownership of the Reference Assets or of a fraction of them, and if so how that ownership is established and divided. Where a dealing in the Reference Asset needs a legal settlement or a transfer of title, it must describe how those requirements are met and what happens to a token transaction that does not produce a legal transfer of the asset. It must also cover reserves, redemption rights with their timelines, and custody of the Reference Assets.

Schedule 1 leaves the choice of applicable items to the issuer's professional judgement. It adds that an applicable item left out makes the whitepaper non-compliant, even when the gap is found later, and that VARA will not confirm in advance which items apply. And under Rule III.B.3, an issuer may not exclude, or attempt to exclude, civil liability for the content of the whitepaper.

The risk statement, and keeping both documents current

Beside the whitepaper stands a second document. Rule III.C.1 requires a Risk Disclosure Statement that describes all material risks of the token. It has to be concise, clear and non-technical, and kept in the same place as the whitepaper while remaining a separate document.

Neither document is written once. Rules III.B.5 and III.B.6 require the whitepaper to stay accurate, and owners must be notified of a change before it takes effect, except where the change concerns security or integrity. Every update carries its date, earlier versions stay accessible, and under Rule III.B.7 the records are kept for at least eight years from the date the token stops circulating.

An ARVA issuer has a monthly duty on top. Rule II.B.1 of the annex requires it to publish on its website, at least once a month, the number and value of the tokens in public circulation and, where reserves apply, their value and composition. Each of those disclosures states whether the token is fully backed by sufficient reserves at that time.

Ownership, reserves, audits and redemption

Part III of the annex holds the obligations that follow an ARVA through its life. The first concerns the link between token and asset. Where a token gives direct ownership of a Reference Asset or a fraction of it, Rule III.B.1 makes the firm responsible for three things. The ownership right must be legally and validly established and must pass with the token. Any legal or regulatory requirement for settlement or transfer of title of the asset must be met, so that a transfer of the token takes effect. And the firm must respond to any token transaction that does not result in a matching legal transfer of the asset, with mitigating measures so that each one does. Under Rule III.B.2, VARA may ask for a legal opinion from a registered lawyer confirming what the firm has told it or written in a whitepaper. The rulebook does not say how this is done for land. That depends on the law governing the asset.

Reserve Assets are a separate idea from Reference Assets. Rule III.C.1 requires them when a token claims a stable value: it must then be backed by sufficient, acceptable reserves. Where reserves exist they are held only with validly licensed and qualified custodians or other entities, kept apart from the firm's own funds, and reachable quickly for redemptions. To the fullest extent the law allows, they are shielded from the firm's creditors, in particular on insolvency, and a practising lawyer must confirm that position to VARA in a legal opinion.

Audits run on two clocks. Under Rule III.D.2 the firm appoints an independent auditor and commissions, every six months, an audit of the number and value of tokens in circulation and of the composition and value of the reserves where they apply. It also commissions an annual audit of its financial statements. Senior management must attest to VARA that each audit is accurate.

Redemption is regulated where the token carries that right. Rule III.E.1 says holders must be able to redeem for equal value in dirhams and in any other form the firm discloses in the whitepaper, directly against the firm or against the reserves. Rule III.E.4 is short: no fee may be charged for processing or completing a redemption.

Capital and fees, as published

The annex fixes one capital figure. Under Rule III.G.1, an ARVA issuer must hold paid-up capital at all times equal to the higher of AED 1,500,000 and 2 per cent of the average market value of the Reserve Assets, where reserves apply, calculated over the preceding 24 months.

A worked example shows how the two limbs meet. Assume an issuer whose reserves averaged AED 50 million over the preceding 24 months. Two per cent of that is AED 1,000,000, which is below the floor, so the requirement is AED 1,500,000. Assume instead an average of AED 120 million: 2 per cent is AED 2,400,000, which is now the higher figure. The crossover sits at AED 75 million, the amount of which 2 per cent equals AED 1,500,000. These are illustrative figures, and the formula refers to reserves, not to the value of the property a token represents.

Fees are set in Schedule 2 of VARA's Virtual Assets and Related Activities Regulations 2023. The table below gives the figures as they are read from VARA's rulebook site; the split between application fee and supervision fee for Category 1 VA Issuance and Broker-Dealer Services is a reading of the page that should be confirmed with VARA.

The schedule explains when each fee falls due. The application fee is payable when the application is submitted, and the application is not processed until it is paid. The annual supervision fee is owed for each licensed activity and is paid in advance of conducting it. A firm that applies for more than one activity pays a Licence Extension Fee for each additional one, which the schedule expresses as 50 per cent of the lower application fee.

As a worked example on that reading of the table, assume a firm that applies for Category 1 VA Issuance alone. Its first-year cost to VARA is AED 100,000 on application and AED 200,000 of supervision, AED 300,000 in all. Assume a second firm that applies for issuance and Broker-Dealer Services together, and that the extension fee is read as half of AED 100,000. It pays AED 100,000, then AED 50,000, then two supervision fees of AED 200,000: AED 550,000. Both totals leave out what the schedule leaves open. VARA may change supervision fees according to a firm's risk profile. It may charge a fee for an application to issue a virtual asset and for a whitepaper submitted by a Category 1 issuer, and no amount is published for either.

The distributor's part

Selling a token for its issuer is a licensed activity of its own. Schedule 1 of the Regulations lists six limbs of Broker-Dealer Services, and the sixth is providing placement, distribution or other issuance-related services to clients that issue virtual assets. The Broker-Dealer Services Rulebook, dated 19 May 2025, calls this Licensed Distribution Services and says it may run from the end-to-end creation of a token to its marketing and its actual sale.

Part IV of that rulebook sets a demanding standard. Under Rule IV.B.1 the distributor must ensure, beyond all reasonable doubt, the quality of every issuer and every virtual asset it distributes. Rule IV.B.2 lists what quality covers, from consumer protection and anti-money laundering to technical and cyber risk.

The due diligence is itemised. On the token, Rule IV.B.3 requires the distributor to check that the whitepaper and the risk statement comply with the Issuance Rulebook, that investor classification follows the Market Conduct Rulebook, and that the smart contracts have been comprehensively audited with every finding remediated. All documentation must carry a disclaimer that VARA makes no representation or warranty about the issuer or the token. The distributor needs a written agreement with each issuer and written controls on its own conflicts, including how the initial placement is priced.

The same route explains Category 2. An issuer of a token outside Category 1 needs no licence and no prior approval, on one condition set by Rule I.E.1: all placement and distribution is carried out by a Licensed Distributor, which takes responsibility for assuring and validating the issuer's compliance.

Marketing: what may be said, and by whom

Marketing has its own text, the Regulations on the Marketing of Virtual Assets and Related Activities 2024, which VARA's rulebook site lists as effective from 1 October 2024. Marketing is defined as any advertisement, invitation, inducement, solicitation, offer or promotion, whatever the medium.

The first rule is about who speaks. Under Regulation I.B.3, a VA Activity may be marketed only by a firm VARA has licensed for that activity, or by another party acting on its behalf and with its approval. For a brokerage or a marketing agency asked to promote a tokenised product, that sentence sets the frame: the mandate comes from a licensed firm, and under Regulation I.C.5 the instructing firm stays responsible while the third party answers for its own breaches.

The second is about content. Regulation I.C.2 requires marketing to be fair, clear and not misleading, and identifiable as marketing. It may not claim that an investment is safe, low-risk or guaranteed, and it may not create false urgency. Marketing of a virtual asset itself, under Regulation I.C.3, must carry a prominent disclaimer that virtual assets may lose their value in full or in part and are subject to extreme volatility, and must state that the investor can lose everything invested and has no financial protection. Records of all marketing are kept for at least eight years.

The ARVA Rules add two points. All marketing of an ARVA must state clearly that it is not covered by any investor protection or deposit guarantee scheme. And the word stablecoin is reserved for a licensed ARVA issuer whose token refers to a single real-world asset and which holds reserves.

The exemptions are narrow: journalistic and educational content that is not primarily marketing, and purely personal communications. Key opinion leaders are expressly denied the first two. An entity outside the Emirate that conducts no VA Activity there and does not target the United Arab Emirates is outside the regulations.

The schedule also adds a further fine of 1 per cent a month, compounding, on amounts not paid in time.

What the pages leave open

Several points a firm or its advisers would look for are not settled by the pages read for this guide.

• Property is not named. No rule read uses the words real estate. Whether a given token is an ARVA follows from the definitions and from VARA's assessment under Rule I.C.2.
• Title to land. The annex requires that a direct ownership right be validly established and pass with the token. It does not say how, and it does not describe the role of the Dubai Land Department.
• The cost of each token. VARA may charge for an application to issue a virtual asset and for a whitepaper submission. The schedule publishes no amount.
• The distributor's capital. The Broker-Dealer Services Rulebook refers capital and prudential requirements to the Company Rulebook, which was not read.

How the rules apply to a particular asset and structure depends on the facts of the case and on the conditions VARA attaches.

The licence authorises the activity, the approval covers one token, and the whitepaper is what the issuer answers for.

Kooky, from Shaka

Kooky edits Agents Estate and builds Shaka, the payment router he made for real estate professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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