Issuing a token in Dubai involves more than writing a smart contract and publishing a whitepaper.
The first question is what the token actually represents. Is its value tied to a fiat currency? Does it represent ownership of a real-world asset? Is it a utility token used within a platform? Can holders transfer or redeem it? Those details determine which VARA token issuance Dubai rules apply.
Dubai's Virtual Assets Regulatory Authority, or VARA, separates virtual asset issuance into Category 1, Category 2 and Exempt VAs. The current Virtual Asset Issuance Rulebook applies across Dubai mainland and its free zones, excluding the Dubai International Financial Centre.
How Does VARA Classify Token Issuance in Dubai?
Under the current rules, the structure looks like this:
Issuance type | Typical scope | Main requirement |
Category 1 | Fiat-Referenced VAs and Asset-Referenced VAs | VARA licence required |
Category 2 | VAs that are neither Category 1 nor Exempt | No issuer licence solely for issuance, but placement and distribution must go through a Licensed Distributor |
Exempt VA | Certain non-transferable or redeemable closed-loop VAs | No prior issuance requirement, subject to applicable VARA rules |
VARA looks at the token itself, the rights or value it represents and the business model around it when deciding its category. A later change to the token can also change its regulatory treatment.
This classification should happen before you announce a token sale or start distribution.
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What Is Category 1 Token Issuance?
Category 1 covers the more regulated forms of virtual asset issuance.
It currently includes:
Fiat-Referenced Virtual Assets, or FRVAs
Asset-Referenced Virtual Assets, or ARVAs
Other virtual assets that VARA may place within Category 1 in the future
You cannot carry out Category 1 issuance in Dubai without a VARA licence. Once licensed, your company becomes a VASP and must comply with VARA's Company, Compliance and Risk Management, Technology and Information and Market Conduct Rulebooks in addition to the issuance rules.
VARA also requires approval of the whitepaper for each Category 1 virtual asset before issuance. Holding a Category 1 licence therefore does not mean you can issue any number of unrelated tokens without further regulatory review.
Fiat-Referenced Virtual Assets
An FRVA is designed to maintain a stable reference to one or more approved fiat currencies.
These issuers face extra requirements covering reserve assets, redemptions, audits, disclosures, marketing and capital.
There is one major boundary to remember. VARA states that an FRVA designed to maintain a stable value against the UAE dirham will not be approved under its FRVA framework. AED-referenced payment tokens fall under the regulatory jurisdiction of the Central Bank of the UAE.
So, if your planned "stablecoin" is tied to AED, do not assume the ordinary VARA Category 1 route applies.
Asset-Referenced Virtual Assets
An ARVA represents or refers to real-world assets, income or related reference assets.
Depending on its structure, this could involve tokenised interests linked to assets or income streams. VARA requires specific disclosures explaining what the token represents, how its value is determined, whether holders receive direct ownership rights and how any reserve assets operate.
That makes legal structuring important before development starts. The rights written into the token, shareholder documents and whitepaper need to tell the same story.
How Does Category 2 Token Issuance Work?
Category 2 covers virtual assets that do not qualify as Category 1 or Exempt VAs.
Under the current rulebook, a Category 2 issuer does not need prior VARA approval for the issuance when all placement and distribution takes place through or by a Licensed Distributor.
The Licensed Distributor takes responsibility for assuring and validating the issuer's compliance with the Virtual Asset Issuance Rulebook. Category 2 issuance should also never be marketed as having been "approved by VARA."
This is an important change to understand because some older online material still refers to a prior VARA approval process for Category 2 tokens.
For a founder, the practical order is:
Classify the token.
Confirm it does not fall within Category 1 or an exemption.
Prepare the required disclosure and compliance material.
Appoint an appropriate Licensed Distributor.
Complete the distributor's due diligence and validation.
Publish the required whitepaper and risk disclosures.
Begin placement or distribution only after the required controls are in place.
Which Tokens Are Exempt?
An Exempt VA can include a qualifying:
Non-transferable virtual asset
Redeemable closed-loop virtual asset
Other virtual asset specifically identified by VARA
There are no prior issuance requirements for these assets under the category framework. However, exempt issuers remain subject to VARA's applicable general rules, supervision and enforcement.
Do not classify your token as exempt simply because it is called a loyalty token or membership token. Its actual transfer, redemption and commercial features determine the treatment.
What Must a VARA Whitepaper Include?
A whitepaper is required for virtual assets issued in Dubai except Exempt VAs.
VARA requires it to be available before the asset is made available to the public, including before offering or marketing activities. It must sit in a single, easily accessible location in a machine-readable format.
The required disclosures can cover:
Issuer information
Legal structure, ownership, management, regulatory permissions, financial position, governance and other entities involved in the issuance.
Token information
Token name and ticker, functionality, intended use, target market, issuance schedule, supply allocation and use of proceeds.
Holder rights
Transfer restrictions, redemption rights, enforceability, liquidity arrangements, dispute procedures and applicable law.
Technology
Blockchain or DLT used, consensus mechanism, wallet requirements, technical standards, fees and relevant audits.
Public offering
Reasons for the offer, fundraising targets and other information relevant to the proposed distribution.
Licensed Distributor
Category 2 issuances must disclose details of the distributor where applicable.
The whitepaper is not a one-time document. It must remain accurate. Updated versions should show the date of revision and previous versions must remain accessible. VARA requires records of whitepaper versions to be retained for at least eight years after the virtual asset stops circulating.
You Also Need a Separate Risk Disclosure Statement
VARA requires issuers to publish a Risk Disclosure Statement separately from the whitepaper.
It should explain material risks in clear, non-technical language that a prospective holder can understand. Generic paragraphs copied from another crypto project are unlikely to explain the actual risks of your token.
The statement must remain accurate as the token or project changes.
VARA Category 1 Licence Process
A Category 1 issuer follows VARA's standard two-stage licensing process.
Stage 1: Approval to Incorporate
You submit an Initial Disclosure Questionnaire through Dubai Economy and Tourism or the relevant Dubai free zone.
VARA may request:
Business plan
Ownership and UBO information
Senior management details
Proposed regulated activities
Business and operational model
The initial payment is typically 50% of the licence application fee.
If accepted, VARA grants Approval to Incorporate. This lets you establish the entity, arrange premises, recruit employees and prepare your systems. It does not let you conduct regulated VA activities.
Stage 2: Full VASP Licence
You then submit the full regulatory documentation requested by VARA.
The review may involve written questions, meetings, interviews and further documents. You pay the remaining application fee and the first annual supervision fee before the licence is issued.
We’ll model the requirements and send back a single-page breakdown within 24 hours.
VARA Token Issuance Fees and Capital Requirements
For Category 1 VA Issuance, VARA currently lists:
Cost | Amount |
Licence application fee | AED 100,000 |
Annual supervision fee | AED 200,000 |
These are VARA regulatory charges. Commercial licensing, office space, staff, insurance, audits, technology, compliance and professional costs are separate. Capital depends on the token.
For an FRVA issuer, paid-up capital must equal AED 1.5 million plus 2% of the value of the available FRVA supply.
For an ARVA issuer, paid-up capital must be at least the higher of AED 1.5 million or 2% of the average market value of applicable reserve assets over the preceding 24 months.
Tokens You Cannot Issue in Dubai
VARA prohibits the issuance of Anonymity-Enhanced Cryptocurrencies and related virtual asset activities in Dubai.
A token project should therefore test its privacy features against the regulatory perimeter before launch.
Common VARA Token Issuance Mistakes
The most expensive mistake is building the token first and checking the category later.
Other problems include treating a Category 2 token as unregulated, launching marketing before publishing required disclosures, using an outdated whitepaper after token economics change, assuming an AED stablecoin belongs under VARA and budgeting for the commercial licence while ignoring VARA capital and supervision costs.
Conclusion
VARA token issuance Dubai rules depend on what your token represents and how it reaches the market.
Category 1 issuance requires a VARA licence and currently covers FRVAs and ARVAs. Category 2 does not require an issuer licence or prior VARA approval under the current framework, but distribution must go through a Licensed Distributor. Exempt VAs follow a lighter route.
The whitepaper, risk disclosures, technology, token economics, ownership rights and distribution structure should therefore be planned together.
Before spending heavily on development, classify the token and confirm which regulator has jurisdiction. A change in one feature can move the project into a different regulatory category.
Frequently Asked Questions
Does every token issuer in Dubai need a VARA licence?
No. Category 1 issuance requires a VARA licence. Category 2 issuance does not require an issuer licence solely for the issuance under the current rules, provided all placement and distribution is handled through or by a Licensed Distributor.
Does Category 2 token issuance require VARA approval in 2026?
Under the current Virtual Asset Issuance Rulebook, no prior VARA approval is required if the Licensed Distributor requirement is met.
Is a whitepaper mandatory for VARA token issuance?
Yes, except for Exempt VAs. The whitepaper must be published before the virtual asset is made available to the public and must remain accurate throughout its life.
Can I issue an AED stablecoin under a VARA licence?
VARA states that an FRVA seeking to maintain a stable value against AED will not be approved under its FRVA rules. AED payment-token issuance sits under the Central Bank of the UAE framework.
How much is the VARA Category 1 issuance licence?
VARA currently lists a Category 1 VA Issuance application fee of AED 100,000 and an annual supervision fee of AED 200,000. Other setup, compliance and operating costs apply separately.
