VARA Dubai’s IOSCO Membership a move into tokenized securities
Dubai’s virtual asset regulator, VARA, is moving closer to the global securities’ regulatory conversation, raising questions about whether it may soon compete more directly with Abu Dhabi’s ADGM for tokenization mandates.
The Virtual Assets Regulatory Authority (VARA) has been accepted as an Associate Member of the International Organization of Securities Commissions (IOSCO), a development that could mark an important step in Dubai’s effort to position itself not only as a crypto hub, but as a future centre for regulated tokenized capital markets.
VARA said the membership strengthens its engagement with the global regulatory community and gives it a platform to exchange perspectives, share supervisory experience and contribute to international discussions on the evolving virtual assets landscape.
The significance is not merely symbolic. IOSCO is the global standard setter for securities regulation, bringing together regulators that oversee more than 99% of the world’s securities and derivatives markets across more than 130 jurisdictions. For a regulator created specifically for virtual assets, closer participation in IOSCO’s network may give VARA greater visibility into how securities regulators are approaching market integrity, investor protection, custody, disclosure and cross-border supervision.
Why IOSCO Membership Matters
VARA has so far been known primarily as Dubai’s dedicated virtual assets regulator, responsible for regulating and overseeing virtual asset activities across Dubai’s mainland and free zones, excluding the Dubai International Financial Centre. Its rulebooks cover activities such as broker-dealer services, custody, exchange services, lending and borrowing, management and investment, advisory services, and transfer and settlement.
But IOSCO membership places VARA closer to the mainstream securities’ regulatory architecture. That matters because tokenization is increasingly blurring the line between virtual asset regulation and traditional capital markets oversight. If tokenized securities become a major product category, regulators will need frameworks that can address both the blockchain-native features of tokens and the investor-protection requirements of securities law.
For VASPs interested in tokenizing securities, VARA’s IOSCO membership could therefore be read as a signal that Dubai is preparing to engage more deeply with securities-style products, not only spot virtual assets. Any such expansion would likely require careful coordination with federal UAE authorities and existing financial free zone regulators, but the direction of travel is clear: virtual asset regulators are no longer operating in isolation from capital markets regulators.
The Federal Link: VARA and the UAE Capital Markets Regulator
A further reason VARA’s IOSCO membership could matter is its relationship with the UAE’s federal capital markets regulator. The Securities and Commodities Authority, which has since been referred to as the UAE’s Capital Markets Authority in some market updates, has a national mandate over virtual asset service providers under the UAE’s federal virtual assets framework, while VARA regulates virtual asset activities in and from Dubai, excluding the Dubai International Financial Centre.
That relationship has already been formalised. In September 2024, the federal authority and VARA signed a cooperation agreement intended to align licensing and supervision of VASPs, support a unified register of regulated providers, strengthen anti-money laundering oversight and enable more seamless passportability of regulated services across the UAE. In practical terms, this gives Dubai-based VARA licensees a clearer route to operate within a broader federal regulatory perimeter, while allowing the federal regulator to maintain visibility over market-wide risks.
For tokenized securities, this coordination could become especially important. Securities tokens sit at the intersection of virtual asset technology and capital markets law. If VARA were to develop or support licensing pathways for VASPs that tokenize securities, a working relationship with the federal capital markets regulator could help address questions around issuance, disclosure, investor eligibility, custody, secondary trading and enforcement. Rather than VARA acting alone, the SCA/CMA relationship could provide the legal bridge needed to bring securities-style products into Dubai’s virtual asset framework in a more credible and coordinated way.
This could also sharpen Dubai’s competitive case. If VARA can combine its specialist virtual asset rulebook, IOSCO-facing regulatory engagement and a cooperative federal pathway with the UAE capital markets authority, it may be able to offer VASPs a more integrated route for tokenized securities than a standalone crypto licence. That would make VARA’s framework more attractive to firms seeking regulatory certainty without necessarily choosing ADGM as their only UAE base.
A Potential Rival to ADGM’s FSRA
The move also has competitive implications within the UAE. Abu Dhabi Global Market (ADGM) has, through its Financial Services Regulatory Authority (FSRA), built a strong reputation for digital asset and tokenization regulation. ADGM launched one of the world’s early virtual asset regulatory frameworks in 2018 and has positioned itself as a jurisdiction capable of supervising tokenized securities, custody and institutional digital finance.
If VARA begins licensing VASPs that want to tokenize securities or facilitate securities-like virtual asset products, it could place Dubai in more direct competition with the FSRA. Firms choosing the UAE as a base for tokenization may then have a strategic choice: pursue ADGM’s financial-services framework in Abu Dhabi, VARA’s virtual-asset framework in Dubai, or structure operations across both jurisdictions depending on the product, client base and regulatory permissions required.
That competition could benefit the UAE’s broader digital finance ambitions. A multi-regulator environment may create regulatory optionality for firms, accelerate policy innovation and attract international players seeking a credible base for tokenized assets. At the same time, it may increase the need for coordination between Dubai, Abu Dhabi and federal authorities to avoid overlapping mandates, regulatory arbitrage or uncertainty over whether a product is a virtual asset, a security, or both.
Coinbase Shows the Opportunity
The timing is notable because Coinbase recently announced that it had received Financial Services Permission from the FSRA to establish an international tokenization hub in ADGM. The permission allows Coinbase to arrange deals in investments and provide custody services to support the launch of tokenized securities.
Coinbase framed the hub as part of a broader effort to make capital markets more accessible through blockchain infrastructure. Under the model described in its announcement, tokenized securities registered and issued in ADGM would be fully backed by underlying shares, with verified token holders receiving shareholder rights such as dividends and voting rights.
The proposition is striking. Investors would need a wallet rather than a traditional brokerage account, while transfers would remain subject to sanctions screening and assets could be frozen or seized at wallet level where legally required. Coinbase also highlighted the possibility of making tokenized securities compatible with decentralized finance applications, attempting to reconcile DeFi composability with regulated securities oversight.
That announcement underscores why VARA’s IOSCO membership may matter. If global exchanges, custodians and asset managers begin seeking UAE licenses for tokenized securities, regulators with credible securities-regulatory alignment will be better placed to attract that business. ADGM has already secured a high-profile win with Coinbase. VARA’s closer connection to IOSCO could help Dubai argue that its virtual asset framework is also evolving toward internationally aligned capital-markets standards.
What Comes Next for VARA and the UAE
The key question is whether VARA will move from virtual asset supervision into a more explicit role for tokenized securities. If it does, Dubai could become a serious alternative venue for VASPs seeking to build tokenization platforms, especially those already licensed or applying under VARA’s existing activity categories.
For now, the development should be treated as an indicator rather than a formal policy shift. VARA’s IOSCO membership does not, by itself, create a securities-token licensing regime. But it does give Dubai’s virtual asset regulator a seat closer to the global securities standard-setting table at precisely the moment when tokenization is becoming one of the most important battlegrounds in financial regulation.
Coinbase’s ADGM approval shows that major crypto firms are no longer only looking for exchange or custody licences; they are seeking regulatory homes for blockchain-based financial instruments that look and behave like securities. If VARA follows that path, the UAE could see healthy regulatory competition between Dubai and Abu Dhabi over who becomes the preferred jurisdiction for the next generation of tokenized capital markets.
