Understanding the UAE’s SCA Approach to Virtual Asset Regulation

In recent years, the United Arab Emirates (“UAE”) has positioned itself as a global leader in virtual asset innovation, developing a modern financial ecosystem powered by blockchain technology and tokenization.

Recognizing the risks of unregulated crypto markets, including fraud, money laundering, and investor losses, the UAE has introduced a comprehensive regulatory framework designed to balance innovation, transparency, and investor protection.

At the center of this evolving landscape stands the Securities and Commodities Authority (“SCA”), the UAE’s federal regulator for securities, commodities, and now, virtual assets.

The SCA’s Federal Oversight and Collaborative Framework

Established in the early 2000s, the SCA acts now as the federal anchor of the UAE’s regulatory ecosystem for virtual assets.

While the UAE allows local and free-zone regulators such as the Virtual Assets Regulatory Authority (“VARA”) in Dubai, the Financial Services Regulatory Authority (“FSRA”) in the Abu Dhabi Global Market (“ADGM”), and the Dubai Financial Services Authority (“DFSA”) in the Dubai International Financial Centre (“DIFC”) to manage specific jurisdictions, the SCA retains ultimate oversight over onshore (mainland) crypto and digital asset activities.

Decision No. 23 of 2020 – The Foundation of Crypto Regulation

A major milestone in the UAE’s virtual asset regulatory journey came in 2020, when the SCA issued Decision No. (23/Chairman) of 2020 Concerning Crypto Assets Activities Regulation. This landmark decision introduced the country’s first onshore licensing and conduct framework for crypto-related activities, including the issuance, trading, listing, and brokerage of digital assets.

It also established clear standards for security tokens, commodity tokens, and crypto exchanges, along with stringent disclosure, custody, and investor protection requirements modeled on traditional securities laws.

Meanwhile, payment tokens, such as stablecoins, were placed under the supervision of the UAE Central Bank, governed by the Stored Value Facilities Regulation and the Retail Payment Services and Card Schemes Regulation.

Cabinet Decision No. 111 of 2022 - A Unified Federal–Local Model for Virtual Asset Regulation

Building on this foundation, the UAE further clarified its regulatory structure in 2022 through Cabinet Decision No. 111 of 2022, which reaffirmed that federal authority over virtual assets and service providers rests with the SCA.

Importantly, this decision also empowered the SCA to delegate specific regulatory powers to local authorities, such as the VARA in Dubai, thereby establishing a federal–local model that balances national consistency with regional flexibility.

• The SCA provides federal-level oversight and ensures alignment with international standards, including those set by the Financial Action Task Force (“FATF”).
• VARA, along with FSRA in ADGM and DFSA in DIFC, oversees licensing and supervision within their respective jurisdictions, encouraging innovation under a harmonized national framework.

This coordinated regulatory system underscores the UAE’s commitment to building a secure, transparent, and innovation-friendly digital asset ecosystem.

Decision No. 26/RM of 2023 – Regulating Virtual Asset Platforms

In 2023, the SCA issued Decision No. 26/RM of 2023, establishing a detailed framework for Virtual Assets Platform Operators (“VAPOs”), including exchanges, brokers, and custodians.

This regulation sets out licensing processes and operational obligations, requiring platforms to meet stringent standards on anti–money laundering (“AML”), risk management, and cybersecurity.

Crucially, it stipulates that only virtual assets approved and registered with the SCA, or licensed by VARA, may be traded within the UAE.

Decision No. 27/RM of 2023 – Recognizing Virtual Assets as Financial Products

In parallel, the SCA issued Decision No. 27/RM of 2023, amending the SCA Rulebook to formally recognize virtual assets as financial products within the UAE’s regulatory framework.

This amendment expands the scope of activities permitted for SCA-regulated financial institutions, such as brokers, fund managers, and advisors, allowing them to trade, broker, or provide advisory services involving virtual assets.

By doing so, these entities now operate under the same governance, conduct, and disclosure standards applied to traditional securities.

The 2024 SCA–VARA Cooperation Agreement

On September 5, 2024, the SCA and VARA signed a cooperation agreement to reinforce the UAE’s position as a global hub for virtual asset regulation.

This agreement establishes a unified national framework for licensing and supervising Virtual Asset Service Providers (“VASPs”), ensuring coordination between the two regulators.

• VASPs in Dubai must obtain a VARA licence, after which they are automatically registered with the SCA to operate across the UAE.
• VASPs outside Dubai must obtain a licence directly from the SCA.

The partnership also includes joint supervision, information sharing, and training initiatives, strengthening regulatory alignment while reducing overlap between federal and local authorities.

Remaining Challenges and Future Outlook

Despite remarkable progress, some jurisdictional overlaps between the SCA, VARA, and the Central Bank continue to evolve. Key areas under review include:

• The classification of assets (e.g., distinguishing between security, utility, and payment tokens).
• The potential introduction of a passporting regime to allow seamless operation between free zones and the mainland.

As of 2025, the SCA remains focused on refining its framework, with upcoming guidance on asset classification and cross-border licensing.

Conclusion

Through coordinated leadership between the SCA, VARA, FSRA, DFSA, and the Central Bank of UAE, the UAE has built one of the most comprehensive and forward-thinking virtual asset regulatory ecosystems in the world.

By balancing federal oversight with local flexibility, the UAE continues to attract leading global exchanges, fintech innovators, and institutional investors, solidifying its reputation as a premier destination for regulated digital finance.