Tokenising real estate or fund interests in Dubai: VARA or the SCA, who actually regulates the token?

VARA's tie-up with Securitize will push more developers and fund managers to tokenise real assets in Dubai, but the regulator that licenses the platform depends on what the token represents, not on where it is issued.

Why this deal reopens a jurisdictional question

VARA's agreement with Securitize is aimed at building rails for tokenising real-world assets, real estate interests, fund units, private credit and similar instruments, on Dubai infrastructure. Securitize's core business elsewhere is not speculative crypto: it is issuing and administering digital securities. That distinction matters enormously in the UAE, because a token that represents a security is generally not a virtual asset that VARA licenses. It falls instead under the remit of the UAE Securities and Commodities Authority (SCA), or, if the vehicle sits in a financial free zone, the DFSA or FSRA. Clients hearing about this partnership and assuming "VARA licence, job done" are asking the wrong question.

How the UAE draws the line

Dubai's virtual asset regime, established under Dubai Law No. 4 of 2022 and the VARA rulebooks issued under it, defines a virtual asset broadly as a digital representation of value that can be traded or transferred and used for investment purposes, but it is built around assets that are not already regulated as securities, commodities or other financial instruments onshore. The federal Cabinet decision governing virtual assets and virtual asset service providers works from the same premise: activities involving instruments that are already subject to SCA regulation sit outside VARA's licensing perimeter. Separately, the SCA has its own crypto-asset framework covering tokens that function as securities or investment products, with defined carve-outs for tokens already licensed by a competent local authority such as VARA or a free zone regulator.

The practical test is substance over form. A token is treated as a virtual asset (VARA's turf) if it is essentially a payment, utility or exchange-traded instrument. It is treated as a security (SCA's turf, or DFSA/FSRA if issued from DIFC or ADGM) if it confers rights economically equivalent to equity, debt, a fund unit or a real estate income interest, regardless of the fact that it is issued as a blockchain-based token rather than a paper certificate.

What this means for a tokenised real estate or fund project

If a developer or asset manager plans to tokenise:

• Fractional ownership of a specific property with rental income or capital appreciation rights passed to token holders, that structure looks like a security or a collective investment interest. It will most likely require SCA authorisation (or a free zone equivalent), a prospectus or disclosure document, and compliance with SCA's marketing and investor protection rules, not a VARA VASP licence.
• A stand-alone payment or utility token used within a platform, with no profit-share or income entitlement attached, is more likely to sit within VARA's licensing regime as a virtual asset activity (issuance, exchange, custody, broker-dealer, as applicable).
• Hybrid structures, common in real-world asset tokenisation, where a token is issued via a VARA-licensed platform but represents an underlying security-like interest, will typically need dual clearance: SCA (or DFSA/FSRA) sign-off on the underlying instrument, and a VARA VASP licence for the platform conducting virtual asset activities on top of it.

A VARA licence tells you the platform can lawfully move virtual assets. It does not tell you the token itself is lawfully offered as an investment.

Practical steps before relying on this partnership

Clients exploring tokenisation on the back of this VARA-Securitize development should, before any launch:

• Characterise the token first: does it carry income, voting, redemption or profit-participation rights? That answer decides the regulator, not the technology stack chosen.
• Map the issuance chain: onshore mainland issuer, DIFC/ADGM SPV, or offshore holding company each trigger different licensing routes and different investor eligibility rules.
• Check SCA's exemption criteria carefully if the platform already holds a VARA licence: exemption from duplicate SCA licensing is not automatic and depends on the specific activity and instrument.
• Build offering documentation to securities-law standards (risk disclosure, eligible investor restrictions, marketing controls) even where the token is distributed through a VARA-regulated exchange, since SCA's investor protection rules apply independently of the distribution channel.

The Securitize partnership is a genuine infrastructure development. It does not, however, collapse the SCA/VARA boundary. Any real estate developer, fund manager or fintech planning to ride this wave needs a securities-law analysis of the token before a virtual-asset-law one.

Key instruments: Dubai Law No. 4 of 2022 (VARA establishment); federal Cabinet decision on virtual assets and VASPs; SCA crypto-asset regulations; DFSA and FSRA rulebooks (DIFC/ADGM contexts). General information, not legal advice.