VARA Prioritizes Consumer Protection in Dubai’s Tokenization Initiatives, Senior Official States

VARA is actively monitoring real-world tokenization in the city to ensure consumer protection.

Key Takeaways:

• VARA’s success is largely attributed to its effective communication with crypto firms, according to a senior official.

• Dubai has become a top destination for international crypto firms due to its clear regulations and strategic location.

• VARA is actively monitoring tokenization efforts in the city to ensure consumer protection.

The landscape of crypto regulation has significantly progressed. Instead of being shuffled between various government agencies, digital assets now have dedicated regulators in many regions.

Among the pioneers in this space is Dubai’s Virtual Assets Regulatory Authority (VARA). What distinguishes VARA is its clear and effective communication of guidelines and regulations to crypto firms, according to a senior official.

"Set and forget does not work for crypto; it's all about feedback and open channels," said Sean McHugh, Senior Director of Market Assurance at VARA. "Because our focus is solely on crypto, we can dive deeper into the technology, and our regulations are designed for the modern era."

Dubai has positioned itself as a leading hub for crypto, attracting international firms looking to establish a presence and expand their reach within the region and beyond.

"Dubai is seen as a prime launchpad," said Sean McHugh, Senior Director of Market Assurance at VARA. "We've observed many crypto firms from Europe and beyond setting up here, and the same applies to companies from the other side of Asia. It’s a strategic decision, and the regulatory clarity makes it easier for them."

The Rise of Tokenization in Dubai

Real-world asset tokenization (RWA) is rapidly gaining traction in Dubai, driven by initiatives like the Dubai Land Department (DLD) pilot program, which is using blockchain to register and transfer property deeds. This initiative is supported by VARA and the Dubai Future Foundation (DFF).

The integration of real estate with blockchain is expected to boost Dubai’s massive property market, with the DLD projecting tokenized real estate transactions to reach 60 billion dirhams ($16 billion) by 2033, making up 7% of total property deals in the city.

Tokenization Extends Beyond Real Estate

McHugh believes real estate is just the beginning. "Tokenization is growing rapidly—not just in Dubai, but worldwide. Dubai has the advantage of executing initiatives quickly," he noted, highlighting increasing precious metal tokenization projects as well.

With its agile regulatory approach, VARA is closely monitoring the tokenization space. "Whether it’s real estate, precious metals, or other assets, my primary focus is consumer protection. Fractionalization brings in new capital and retail investors, who need to be safeguarded," McHugh emphasized.

"We ask a lot of questions when it comes to RWA projects," McHugh explained. "What exactly is the token? What do investors truly own? How does it trade, and who provides liquidity? Because for investors—whether institutional or retail—having a liquidity event to exit is crucial. These are the key aspects we scrutinize with each project."

Collaboration Among Regulatory Agencies

The Trump administration in the U.S. has publicly supported cryptocurrency, which some industry leaders believe has influenced other regions to follow suit. However, in the UAE, VARA was established three years ago, well before the U.S. president became an advocate for digital assets.

McHugh sees global cooperation among agencies as essential for crypto regulation but does not believe any single entity will take the lead. "I don't think we'll see a ‘super regulator,’ whether regional or global. Each agency is primarily focused on its own market," he noted. Instead, he emphasized the importance of memoranda of understanding (MoUs) and open communication between regulators to ensure proper oversight of the industry.

From exchanges and Web3 to RWA, Dubai's crypto sector continues to thrive. McHugh, formerly the Chief Compliance Officer at Citadel, attributes this success to the city’s pro-business and startup-friendly environment.