Dubai issues token rules for RWAs and stablecoins

Dubai authorities responsible for virtual asset oversight and financial services published guidance that sets rules for issuing tokens tied to real-world assets and for stablecoins. The guidance applies to firms operating in the emirate’s regulated zones and was released recently.

Issuers of tokenized real-world assets must obtain the appropriate authorization, ensure legal enforceability of tokenized rights and establish clear custody and asset segregation arrangements. Issuers are required to document ownership of underlying assets, demonstrate market valuation procedures and maintain records that allow investors to verify the backing of tokens.

The guidance sets conditions for stablecoins on reserve composition, custody of reserves and redemption mechanisms. Fiat-backed stablecoin issuers must hold reserves in regulated financial institutions or trust arrangements, keep reserves separate from operating accounts and provide regular third-party attestations or audits of reserve holdings.

Issuers must provide mechanisms for timely redeemability at par value and disclose the assets backing the stablecoin, the frequency of reserve reporting and any limits on convertibility.

Anti-money laundering and counterterrorist financing controls apply to tokenized real-world assets and stablecoins. Issuers, custodians and trading platforms must carry out know-your-customer checks, transaction monitoring, sanctions screening and suspicious activity reporting. Firms must implement governance with defined roles, risk management policies and procedures to address operational and cyber risks.

Trading platforms and custodians that list, trade or hold tokenized products must meet registration or licensing requirements, keep transparent trading records and ensure client asset protections. When tokens represent securities or regulated financial instruments, issuers and trading venues must coordinate with securities regulators and comply with applicable prospectus and disclosure rules.

The guidance specifies permissible asset classes including real estate, commercial paper and other debt instruments, commodities and tokenized shares, provided legal title and enforceability are established. Issuers must confirm tokenization does not create ambiguous or duplicative claims and must set procedures for asset substitution, custody failures and insolvency events.

Regulators require independent third-party custodians or trustees to hold underlying assets and encourage use of recognized custodians and banks to reduce custody risk. Where ownership is recorded on blockchain systems, off-chain legal documents must align with on-chain records. Regular audits and reconciliations between on-chain balances and off-chain asset records are required to prevent mismatches.

The guidance imposes heightened standards for algorithmic or uncollateralized stablecoins, including stricter capital, liquidity and operational requirements, stress testing and contingency plans for peg stability. Cross-border stablecoin arrangements must address prudential, tax and consumer protection implications with relevant international partners.

Regulators framed the guidance to provide a regulatory framework for issuing, listing and trading tokenized real-world assets and stablecoins within Dubai’s regulated jurisdictions.