UAE Securities and Commodities Authority integrates DLT Token into the current legal framework, applying the "technology-neutral" principle.
The UAE Securities and Commodities Authority (UAE SCA) has officially issued a comprehensive set of regulations on securities tokens and commodity contract tokens, after publishing a draft for consultation in January 2025. The new regulation aims to ensure that contracts issued through Distributed Ledger Technology (DLT) are integrated into the current legal framework of virtual assets in the UAE.
UAE SCA defines securities tokens and commodity contract tokens as digital representations of assets such as corporate shares, stocks, and bonds, with the same level of investor protection and legal supervision as traditional securities. During the consultation, UAE SCA provided examples of gold tokens and oil tokens.
The new regulation applies a consistent principle for legal handling of securities and commodity contracts, regardless of the technology used for issuance. This approach aims to control and minimize risks from DLT technology application while preserving the integrity of the legal regulatory regime.
According to UAE SCA, this is a "technology-neutral" regulation, meaning that whether contracts are issued in text, electronic files, or code on a DLT system (permissioned or permissionless), they are still bound by the same legal requirements and core regulations.
Strict Technical Requirements for DLT Systems
The DLT system used must meet three main conditions. First, it must ensure that the obligation recipient - not the obligation issuer - has control and transfer rights of their interests. Second, the system must be protected by sufficiently strong technical and organizational measures to prevent unauthorized modifications.
Finally, the content of interests, ledger operation method, and registration agreement must be recorded in the DLT or associated linked data. The obligation recipient can access related information and verify the integrity and accuracy of data without relying on third parties.
The new regulation also stipulates that securities tokens and commodity tokens can only be traded over-the-counter (OTC) through digital wallets provided by digital wallet providers, or pre-authorized and whitelisted self-custody wallets.
UAE SCA defines a digital wallet as software or a tool for controlling, protecting, and managing public and private cryptographic keys. Digital wallet service providers are market organizations or licensed entities operating alternative trading systems and providing custody services for tokens through cryptographic key control.
Emirates Coin Investment LLC (EmCoin) may become the first entity to issue securities and commodity tokens. In June, EmCoin announced becoming the first integrated investment platform licensed by UAE SCA to provide crypto investment products alongside traditional assets such as stocks, commodities, and ICO.
UAE is also accelerating real estate tokenization through the PRYPCO Mint project - a collaboration initiative between Dubai Land Department (DLD) and PRYPCO, licensed by the Virtual Assets Regulatory Authority (VARA). The project has successfully listed and raised capital for two tokenized properties in the UAE.
