Ms. Adonis, the UAE is regarded as a Web3 and crypto hub. Where does UAE regulation stand out?

Two factors set the UAE apart: purpose-built regulators and comprehensive coverage across the value chain. Dubai created the world’s first regulator devoted exclusively to virtual assets. The Virtual Assets Regulatory Authority (VARA) was established in 2022 and is the world’s first regulator dedicated solely to virtual assets. Rather than forcing crypto into legacy securities law, VARA’s rulebooks provide clear licensing categories and encourage innovation while protecting investors.

Abu Dhabi Global Market (ADGM) introduced the region’s first bespoke digital asset framework, and its Financial Services Regulatory Authority (FSRA) became the world’s first regulator to supervise multilateral trading facilities for virtual assets. At the federal level, the Central Bank of the UAE (CBUAE) issued the Payment Token Services Regulation, effective August 2024, which requires merchants outside the free zones to accept only licensed dirham payment tokens and restricts stablecoin issuance to licensed providers. ADGM’s FiatReferenced Token (FRT) regime complements this by allowing the issuance of fiat-backed stable coins.

The result is a choice of regulatory homes: Dubai’s VARA; Abu Dhabi’s ADGM; the Dubai International Financial Centre (DIFC) with its own crypto token regime under the Dubai Financial Services Authority (DFSA); the central bank for payment tokens; and the Securities and Commodities Authority (SCA) for security tokens and non-freezone activities.

«Businesses can choose a tailored regulatory home that fits their product and investor base.»

In 2025 these frameworks moved from pilot projects to full operational regimes: VARA activated issuance rulebooks for fiat referenced and asset referenced tokens (FRVA/ARVA); the SCA formalised digital securities classification; the lender of last resort implemented live dirham payment token systems; and Dubai’s Land Department (DLD) began registering tokenised real estate transactions on chain. Together these developments create a holistic environment that few jurisdictions can match.

Are there specific regulations for tokenisation, Distributed Ledger Technology (DLT) and Decentralised Autonomous Organisations (DAOs)?

Yes. The UAE has developed targeted frameworks for different tokenisation models and decentralised governance:

• Stablecoins and asset referenced tokens: VARA’s Issuance Rulebook for FRVA and ARVA requires 100% reserve backing, detailed whitepapers, minimum capital and ongoing reporting. CBUAE’s Payment Token Services Regulation mandates full collateralisation and realtime redemption for dirham-backed payment tokens. ADGM’s FRT regime permits fiatbacked tokens and prohibits algorithmic stablecoins.
• Security and commodity tokens: SCA’s digital securities classification system (Resolution 15/2025) distinguishes between security tokens, commodity tokens and utility tokens. Issuers must prepare IPO-style prospectuses, list on SCA-approved exchanges and comply with ongoing disclosure, investor verification and market abuse controls. 
• Real estate tokenisation: DLD and DIFC allow tokenised property sales with onchain title registration. Investors conduct due diligence, complete KYC/AML via DIFC-approved providers, purchase tokens through VARA-licensed platforms and automatically register ownership with the DLD. The framework integrates foreign ownership rights and Sharia-compliant structuring.
• DLT Foundations and DAOs: ADGM’s DLT Foundations framework, launched in 2023 and expanded in 2025, provides a world first legal wrapper for blockchain foundations, DAOs and Web3 entities. Embedded in English common law, it enables innovative governance through token voting and smart contracts, eliminates physical presence requirements and establishes independent legal personality. This regime allows projects to register quickly, issue utility tokens and protect assets from foreign claims, making it a leading model for decentralised governance.

The breadth of these frameworks—covering payment tokens, stablecoins, security tokens, commodity tokens, real estate tokens and DAOs—means businesses can choose a tailored regulatory home that fits their product and investor base. It also explains why the UAE continues to attract global Web3 firms and investors.

What are the advantages of setting up shop at ADGM for blockchain-related firms?

ADGM offers common law certainty, independent courts and a mature regulatory framework. It introduced the region’s first bespoke digitalasset regime and remains the only jurisdiction globally where a regulator supervises multilateral trading facilities for virtual assets. In June 2025 the FSRA amended its framework to streamline acceptance of virtual assets, sharpen capital requirements and give itself product intervention powers. These amendments also ban privacy tokens and algorithmic stablecoins within ADGM and broaden venture capital funds’ permissible investments.

ADGM’s Fiat Reference Tokens rules permit the issuance of fiat referenced tokens (stablecoins) and require full collateralisation and realtime valuation. Its DLT Foundations framework, launched in 2023 and expanded in 2025, is the world’s first regime designed specifically for blockchain foundations, DAOs and Web3 entities. The framework provides a robust legal structure embedded in English common law, allowing innovative governance through token voting and smart contracts while eliminating the need for physical presence. These features, combined with a sophisticated arbitration centre and flexible business environment, make ADGM a compelling hub for global digital asset firms.

Where do you see room for improvement at VARA, ADGM and DIFC?

Fragmentation remains the main challenge. Companies must still choose between onshore Dubai and the DIFC because there is no passporting regime, so many operators obtain licences in multiple jurisdictions. Overlapping authority among the SCA, CBUAE, VARA and ADGM means businesses face duplicative compliance. The Payment Token Services Regulation applies only to the mainland, excluding financial free zones, while ADGM and DIFC have separate crypto token regimes and capital requirements.

However, there are signs of convergence. In August 2025 the SCA and VARA announced a strategic regulatory partnership to unify policy frameworks, provide mutual recognition of virtual asset licences and create a unified registration mechanism for Virtual Asset Service Providers (VASPs). The agreement includes joint supervision, information exchange and elimination of regulatory duplication. A coordinating committee chaired by the SCA will review legislation and propose unified initiatives.

«We are likely to see clusters of compatible rules rather than a single global code, with the UAE playing a central role in MiddleEastern standards.»

This cooperation aims to deliver a single virtual asset sector register and seamless passportability across the UAE. Meanwhile, ADGM amended its digital asset framework in June 2025 to streamline virtual asset acceptance, refine capital requirements and prohibit privacy tokens and algorithmic stablecoins.

The regulatory landscape is internationally fragmented. Do you see a chance for harmonisation?

Full harmonisation is unlikely, but regional convergence is happening. ADGM’s FSRA actively builds bridges with foreign regulators through a network of multilateral and bilateral memoranda of understanding.  

VARA’s international engagement is more limited; its focus is on cooperation with the federal SCA and participation in international standard setting bodies like FATF rather than signing multiple bilateral MoUs. The Payment Token Services Regulation sets a federal standard for stablecoins and may serve as a template for other Gulf states.

Crossborder initiatives such as Project Aber, a UAE–Saudi digital currency pilot and other GCC central bank programmes continue. In August 2025 the SCAVARA partnership established a unified VASP registration mechanism and mutual licence recognition, signalling a move toward harmonisation within the UAE. Internationally, the EU’s MiCA framework and U.S. legislation like the «Genius Act» on stablecoins indicate a move toward global norms. We are likely to see clusters of compatible rules rather than a single global code, with the UAE playing a central role in MiddleEastern standards.

Traditional finance still struggles with DeFi. Why do many UAE banks avoid crypto trading?

Banks remain cautious because of risk and correspondent banking relationships. In The Central Bank’s 2023 AML/CTF guidance imposes extensive due diligence for virtual asset transactions.. The guidance, based on FATF standards, imposes stringent due diligence obligations and increases compliance costs. Under the Payment Token Services Regulation, banks may not act as payment token issuers directly; they must establish licensed subsidiaries or affiliates and meet capital, operational and reporting requirements. Most local banks rely on U.S. and European correspondent banks that remain wary of crypto exposure, so they hesitate to offer direct crypto trading. Until international clearing banks and global regulators become more comfortable with DeFi, local banks will continue to take a cautious stance.

Which assets are the best regulated and therefore most secure: Bitcoin, Ethereum, stablecoins or altcoins?

Regulatory certainty is highest around Bitcoin and Ether, which most major jurisdictions treat as commodities or non-security tokens. The Payment Token Services Regulation defines Dirham Payment Tokens and requires stablecoins to be fully backed, licensed and redeemable. ADGM’s Fiat Reference Tokens regime permits only fiat-backed tokens and prohibits algorithmic stablecoins.

«Switzerland is a benchmark for clear, business-friendly regulation.»

Dubai’s VARA rulebooks for FiatReferenced Virtual Assets (FRVA) and AssetReferenced Virtual Assets (ARVA) require 100% backing, stringent whitepaper disclosures and ongoing reporting. Stablecoins issued under these frameworks are therefore relatively secure. Altcoins vary widely: some are deemed securities, others utilities or unregulated; their legal status and investor protection depend on the jurisdiction.

Which legal environment is better for Web3: French civil law or British common law?

Common law is better suited to fast evolving technology because judges can adapt precedent without waiting for legislation. That flexibility is why ADGM and DIFC adopt English common law. Civil law systems like France offer predictability via codes but can be slower to accommodate innovation and novelty. A hybrid approach that combines civil law clarity with common law adaptability would best serve Web3 businesses

How do you judge Swiss regulation on cryptocurrencies and Web3 businesses?

Switzerland is a benchmark for clear, business-friendly regulation. Its DLT Act classifies tokens as payment, utility or asset tokens and integrates them into existing law, attracting major institutions. Although Swiss law still lacks detailed DAO provisions, Switzerland ranks among the most predictable jurisdictions and is viewed alongside the top destination for crypto firms.

Two years ago the U.S. Department of Justice pressed charges against several cryptocurrency providers. Is the legal risk still high to do crypto business in the U.S., or has the climate improved?

The U.S. remains both the biggest market and a high risk jurisdiction. Enforcement by the Securities and Exchange Commission and Department of Justice continues to be aggressive, particularly around token classifications and stablecoins. While the GENIUS Act (passed in July 2025) establishes a federal framework for certain stablecoins and there is growing congressional support for clearer rules, the legal climate remains unpredictable. Businesses should expect ongoing enforcement and seek local counsel before entering the market.

Where do you see cryptocurrency regulation in five years?

By 2030, expect global AML standards, explicit stablecoin rules, formal regimes for tokenised real world assets and widespread issuance of central bank digital currencies, with the UAE’s digital dirham already in the works. Jurisdictions that embrace compliance as a strategic advantage, such as the UAE and Switzerland, will continue to attract talent and investment; laggards will fall behind.

Overall, the UAE’s multilayered regulatory ecosystem and proactive approach to innovation offer a model that other jurisdictions are watching closely.

Georgette Adonis is a legal professional based in the UAE, founder and managing partner of Adonis Advisory Group, a boutique legal & regulatory consultancy. 

Her specialties include digital assets / Web3, fintech, regulatory compliance, corporate and financial services law, private wealth structuring, investment migration.