VARA's Asset Reference Token Rules: What Dubai's Issuance Rulebook Means for Firms
Dubai's Virtual Assets Regulatory Authority has updated its VA Issuance Rulebook to set out, for the first time, a dedicated prudential framework for Asset Reference Tokens and Fiat Referenced Virtual Assets. The September 2023 edition draws a sharp regulatory boundary between tokens that need only a VARA registration and those that require a full regulated licence before a single token reaches the market. For accounting firms advising UAE-based issuers, for CFOs structuring digital-asset programmes, and for any firm using crypto accounting software to record stablecoin positions, the new rulebook changes the compliance landscape in ways that are immediate and concrete.
What the Rulebook Actually Says
VARA's updated Issuance Rulebook covers the full lifecycle of a virtual asset issuance: licensing, approval and registration conditions, whitepaper and public disclosure obligations, ongoing issuer compliance duties, and the authority's supervision and enforcement powers. The September 2023 edition adds dedicated rules for two specialist token categories that are designed to hold a stable value against an underlying real-world asset.
Asset Reference Tokens
An Asset Reference Token (ART) is a virtual asset that references one or more assets, currencies, or a basket of both, to stabilise its value. VARA's rulebook creates a stand-alone annex for ARTs, setting out what an issuer must disclose in its whitepaper, how it must manage its reserve assets, and what ongoing reporting it owes the regulator. The framing is deliberately aligned with global standard-setting work, and VARA has noted that several international authorities have already sought collaboration on the model.
Fiat Referenced Virtual Assets and the Central Bank Carve-Out
The rulebook's most consequential provision concerns Fiat Referenced Virtual Assets (FRVAs), which are tokens pegged to a fiat currency. VARA's rules apply specifically to FRVAs referenced against non-AED currencies. Any token designed to maintain a stable value against the UAE Dirham falls exclusively under the UAE Central Bank's jurisdiction. This delineation is, by VARA's own account, a global first: a regulator explicitly carving out the domestic-currency stablecoin from its own rulebook and assigning it unambiguously to the monetary authority. That single sentence in the rulebook removes an entire category of jurisdictional ambiguity that has tripped up issuers in other markets.
Two Tiers of Authorisation
For everything within VARA's perimeter, the rulebook introduces a two-track authorisation model:
- Registration with pre-approval: available to lower-risk issuances that satisfy defined criteria and do not require a full licensed entity.
- Full regulated VARA licence: required before issuance where the token meets thresholds for systemic significance, wider distribution, or other risk factors set out in the rulebook.
The distinction matters for accounting purposes because the licence category determines the regulatory capital and reserve-segregation obligations an issuer must carry on its balance sheet.
AML and CFT as a Structural Requirement
VARA is explicit that this rulebook update is, in part, a response to the UAE's national AML and counter-terrorist financing priorities. The rulebook integrates AML and CFT obligations directly into the issuance framework rather than treating them as a separate compliance layer bolted on after authorisation.
What That Means in Practice
For any firm onboarding a UAE-based ART or FRVA issuer as a client, the AML file needs to reflect the issuer's licence tier, its whitepaper disclosures, and its reserve composition. A registration-only issuer carries a different risk profile than a fully licensed one, and that difference should be documented in the counterparty due diligence record. Firms that have not yet built a structured VASP onboarding process should review VASP due diligence and onboarding framework guidance alongside this rulebook update.
The AML integration also has a direct bearing on transaction monitoring. Stablecoin flows from a VARA-regulated FRVA issuer will now carry a regulatory pedigree that can be evidenced in screening workflows. That is relevant both for correspondent banks processing dirham-adjacent flows and for exchanges listing these tokens.
Accounting Implications for Firms and CFOs
The rulebook's prudential requirements have direct read-through to financial reporting. How a firm accounts for an ART or FRVA on its balance sheet depends on the instrument's contractual terms, the reserve structure mandated by VARA, and whether the token meets the definition of a financial instrument under IFRS 9 or a liability under IAS 32.
Reserve Asset Segregation and the Balance Sheet
VARA's rules require issuers to hold reserve assets that back outstanding tokens. From an issuer's perspective, those reserves are a restricted asset: they cannot be freely deployed. Under IFRS, a question arises as to whether they should be presented separately from other cash and liquid assets, particularly where the issuer is also a regulated entity with minimum capital requirements. The answer is almost certainly yes, and the disclosure note should explain the nature of the restriction, the composition of the reserve portfolio, and any liquidity risk arising from a mismatch between redemption obligations and reserve liquidity.
For a holder of an ART rather than an issuer, the accounting question is different. If the token is redeemable for a fixed fiat amount on demand, it may qualify as a financial asset measured at amortised cost. If the redemption terms introduce variability, fair value through profit or loss is more likely. In either case, the VARA whitepaper disclosure is the primary source document an auditor will want to see.
The Central Bank Carve-Out and Consolidated Group Accounts
Groups that operate across both the VARA and UAE Central Bank perimeters need to map the regulatory boundary into their chart of accounts. A dirham-referenced token issued by a Central Bank-regulated subsidiary and a non-AED FRVA issued by a VARA-licensed entity are different instruments, likely with different accounting treatments and different disclosure requirements, even if they appear economically similar at first glance. Consolidation adjustments will need to eliminate intra-group token holdings correctly, and the audit trail should document which regulator governs each instrument.
Digital Asset Accounting Software Considerations
Firms relying on digital asset accounting software to record stablecoin balances should verify that their system can capture the licence tier of the issuer as a metadata field. The VARA two-tier model means the same token type, an FRVA, carries different counterparty risk depending on whether the issuer holds a registration or a full licence. That distinction should flow through to risk-weighting in any internal management accounts and to the impairment assessment for financial assets under IFRS 9. Good crypto bookkeeping software will allow that field to be set at the asset level rather than applied globally to all stablecoins.
Cross-Border and Interoperability Angles
VARA has positioned this rulebook as a contribution to global regulatory interoperability, and several international authorities have reportedly engaged with the framework. That ambition has practical implications for firms with multi-jurisdiction clients.
Passporting and Equivalence
No formal passporting arrangement exists yet between VARA and other major regimes such as the EU's MiCA framework. However, the structural similarity between VARA's ART category and MiCA's own Asset-Referenced Token definition is not accidental. An issuer that has gone through VARA's whitepaper and reserve disclosure process will have produced documentation that is substantially responsive to MiCA's requirements as well, even if a separate MiCA authorisation is needed for EU distribution. Accounting firms advising clients on dual-jurisdiction programmes should map the disclosure requirements side by side before duplicating work. For a broader view of how stablecoin rules are evolving across major markets, the Q2 2026 global crypto policy roundtable provides useful context on parallel developments.
TradFi to DeFi Bridge
VARA frames the rulebook as building a secure bridge between traditional finance and decentralised finance ecosystems. For corporate treasury teams, that framing signals that VARA-regulated ARTs and FRVAs are intended to be usable in both on-chain settlement and conventional payment rails. Treasury policies should be updated to reflect that a VARA-licensed FRVA issuer now operates within a defined prudential perimeter, which changes the credit risk assessment compared with an unregulated stablecoin arrangement.
What Firms Should Do Now
The rulebook is already in effect. The steps below are not speculative preparation; they reflect obligations that are live for any firm operating in or serving clients in the Dubai virtual asset market.
For Accounting and Audit Firms
First, identify which clients issue or hold ARTs or FRVAs under VARA's framework, and confirm their licence tier. Second, review whether existing engagement letters and audit procedures cover the reserve-asset segregation requirements now mandated by the rulebook. Third, update client risk assessments and AML files to reflect the new two-tier authorisation structure. Fourth, check that any crypto accounting software in use can capture VARA licence status at the instrument level. For a wider view of how AML obligations interact with virtual asset accounting tools, the crypto AML software capabilities guide sets out the detection functions that regulators now expect.
For CFOs and Corporate Treasury
If your treasury holds non-AED stablecoins that could be classified as FRVAs, confirm whether the issuer is VARA-registered, VARA-licensed, or operating outside VARA's perimeter entirely. That determination affects the credit risk assessment, the accounting treatment, and the disclosures required in your next set of financial statements. If your entity is considering issuing an ART or FRVA, the whitepaper and public disclosure requirements in the rulebook are the starting point for scoping the project, not an afterthought.
Frequently Asked Questions
Does the VARA rulebook apply to all stablecoins used in Dubai?
No. Tokens pegged to the UAE Dirham are explicitly excluded from VARA's perimeter and regulated by the UAE Central Bank. VARA's FRVA rules apply only to stablecoins referenced against non-AED currencies. Other virtual assets that do not meet the ART or FRVA definitions are governed by separate VARA activity-based rules.
What is the difference between registration and a full VARA licence for an issuer?
Registration with pre-approval is a lighter-touch pathway for lower-risk issuances. A full regulated VARA licence is required where the token meets defined thresholds relating to distribution scale, systemic significance, or other risk factors. A fully licensed issuer faces more extensive ongoing supervision, reporting, and capital requirements than a registered one.
How should an auditor treat the reserve assets held by a VARA-regulated FRVA issuer?
Reserve assets mandated by the VARA rulebook are restricted assets from the issuer's perspective. They should generally be presented separately in the balance sheet with a disclosure note explaining the restriction, the reserve composition, and any liquidity risk. The specific presentation will depend on the contractual terms and the applicable IFRS standards, particularly IAS 1 and IFRS 7.
Is a VARA-licensed ART likely to be recognised under MiCA if an issuer wants to distribute into the EU?
There is no formal equivalence or passporting arrangement between VARA and the EU's MiCA regime as of the rulebook date. However, the two frameworks share structural similarities in their ART definitions and whitepaper requirements. An issuer that has completed VARA's disclosure process will have produced documentation that addresses many MiCA requirements, but a separate MiCA authorisation is still needed for EU distribution.
What should a CFO do if their treasury holds a stablecoin from an issuer that is not VARA-registered?
An unregistered issuer operating in Dubai without VARA authorisation is, by definition, operating outside the regulatory perimeter. The CFO should assess whether holding that instrument is consistent with the company's risk policy, document the counterparty risk in the treasury register, and consider whether the position should be disclosed as a contingent exposure in the financial statements. Taking legal advice on whether continued holding constitutes facilitation of an unlicensed activity is also prudent.
Source: VARA Dubai