Dubai’s VARA: Leading the Charge in Crypto Regulation and Tokenization
The success of Dubai’s Virtual Assets Regulatory Authority (VARA) can be attributed to its strong communication strategy with crypto businesses, according to a senior official.
Dubai has emerged as a top destination for international crypto firms due to its clear regulatory framework and strategic position in the global market. Meanwhile, VARA is actively monitoring real-world tokenization efforts while ensuring consumer protection remains a top priority.
Advancing Crypto Regulation
Regulation of digital assets has evolved significantly. Previously, various government agencies passed the responsibility between them, but today, dedicated regulatory bodies oversee the sector in many parts of the world.
VARA stands out as a pioneer in crypto regulation, particularly due to its proactive engagement with businesses. Unlike traditional regulatory approaches, VARA emphasizes continuous communication and feedback.
“‘Set and forget’ doesn’t work for crypto. It’s all about open channels and constant feedback,” said Sean McHugh, Senior Director of Market Assurance at VARA. “Since we are fully focused on virtual assets, we can dive deeper into the technology and craft regulations suited for the modern era.”
Dubai’s appeal to crypto firms has grown rapidly, making it a strategic hub for companies entering new markets.
“Dubai serves as a great launchpad. Many firms from Europe and Asia are setting up here, while we also see movement in the opposite direction,” McHugh added. “The combination of regulatory clarity and strategic location makes it an attractive choice.”
The Rise of Tokenization
Real-world asset tokenization (RWA) is gaining momentum in Dubai, particularly in the real estate sector. The Dubai Land Department (DLD) recently initiated a blockchain-based pilot program for registering and transferring property deeds. This initiative is supported by VARA and the Dubai Future Foundation (DFF).
With the integration of blockchain into the real estate sector, Dubai’s already thriving property market could reach new heights. DLD forecasts that tokenized real estate transactions will reach AED 60 billion ($16 billion) by 2033, representing 7% of the city’s total property transactions.
McHugh, speaking to CoinDesk at VARA’s headquarters, highlighted that tokenization is not limited to real estate.
“It’s a growing trend, not just in Dubai but globally. Dubai, however, has the agility to implement changes faster,” he said, noting the rise of precious metal tokenization projects as well.
VARA remains committed to overseeing these advancements with a strong focus on consumer protection.
“Whether it’s real estate, precious metals, or other assets, our key focus is ensuring investor security,” McHugh stated. “With fractional ownership models, new capital and retail investors enter the market, and they need proper safeguards.”
VARA rigorously examines RWA projects, asking critical questions such as, “What is the token? What does ownership entail? How does it trade? Who provides liquidity?” These assessments ensure that investors—whether institutional or retail—can confidently navigate the market.
Interagency Collaboration and the Future of Crypto
While the U.S. government, particularly under the Trump administration, has publicly supported crypto adoption, the UAE has taken a different path. VARA was established three years ago—well before U.S. political figures became vocal proponents of digital assets.
McHugh believes that collaboration among agencies is essential for effective global crypto regulation. However, he does not foresee a single entity taking charge.
“I don’t see a ‘super regulator’ emerging, whether on a regional or global level. Instead, each agency will focus on its own jurisdiction,” he explained. “Memoranda of understanding (MoUs) and open communication between governing bodies are the keys to overseeing the crypto space effectively.”
From crypto exchanges to Web3 innovations and real-world asset tokenization, Dubai’s crypto landscape looks promising. McHugh, who previously served as Chief Compliance Officer at Citadel, attributes this to the city’s business-friendly and startup-driven ecosystem.
