Dubai Becomes 2025 RWA Hub as VARA Framework Catalyzes $25B Tokenization Boom

Dubai has emerged as a leading jurisdiction for real-world asset (RWA) tokenization in 2025, driven by a newly introduced regulatory framework under the Virtual Assets Regulatory Authority (VARA). The city’s updated rulebook addresses longstanding gaps in legal infrastructure, enabling a structured approach to issuing, custody, and trading tokenized assets. This development marks a shift from conceptual experiments in security token offerings (STOs) to a scalable financial model that aligns with Dubai’s broader D33 economic agenda. Key sectors poised for tokenization include real estate, commodities, and intellectual property, with regulatory clarity fostering innovation while ensuring operational resilience.

The success of Dubai’s RWA ecosystem hinges on its ability to solve a “catch-22” dilemma that previously stalled STOs: the absence of functional secondary markets and legal frameworks. VARA’s end-to-end governance model now provides a clear regulatory perimeter, attracting asset owners and institutional investors seeking transparency and efficiency. Juliet Su of NewTribe Capital highlights that tokenization’s value lies in aligning it with market demand, emphasizing the need for projects to demonstrate additive benefits such as liquidity, fractional ownership, or democratized access. Real estate has become an early focal point due to its economic significance and the tangible efficiencies tokenization offers, such as faster settlement cycles.

A robust ecosystem of regulated players is accelerating Dubai’s RWA growth. Tokenization platforms, broker-dealers, custodians, and legal advisors are collaborating to build a full-stack market. While the regulatory framework is less than two months old, the pace of infrastructure development is notable. Projects like Ctrl Alt, the first licensed real estate tokenization platform in the Middle East and North Africa (MENA) region, exemplify this momentum. By enabling fractional property investments starting at AED 2,000, Ctrl Alt demonstrates how Web3-native platforms can integrate real-world assets into Dubai’s capital markets without compromising compliance.

Launching an RWA project in Dubai requires navigating a multi-regulatory environment. While VARA oversees tokenization of non-security assets, other regulators govern traditional securities and fiat. Founders must conduct thorough regulatory assessments to determine jurisdictional boundaries. For instance, tokenized company shares or bonds fall under the Securities and Commodities Authority, while tokenized UAE Dirham are regulated by the central bank. Anton Golub, an RWA advisor, underscores the importance of structuring projects around compliant legal frameworks, noting that licensing decisions shape investor access and token liquidity. Projects must prioritize virtual asset service provider (VASP) licensing and meet stringent governance, custody, and investor protection standards.

The regulatory landscape includes high entry barriers for marketplaces. Broker-dealers and exchanges must hold Category 1 ARVA licenses, requiring a minimum capital of AED 1.5 million and operational readiness. Compliance functions, cybersecurity systems, and physical offices are mandatory, with licensing fees ranging up to AED 200,000 annually. While these requirements deter casual entrants, VARA’s CEO Matthew White emphasizes that flexibility can accommodate innovation where institutional-grade rigor is maintained. Startups may opt for a “sponsored regime,” operating under existing VASP licenses to reduce costs and accelerate go-to-market timelines. This model allows founders to test product-market fit while adhering to regulatory oversight, though compliance responsibilities remain with the sponsor.

Asset owners who prefer not to run trading platforms can pursue a streamlined Category 1 ARVA license for token issuance alone. This leaner structure delegates custody and trading to third-party platforms, enabling specialization in yield generation and product management. For companies avoiding licensing entirely, outsourcing tokenization to regulated entities offers another pathway. By partnering with licensed issuers, asset owners can leverage existing infrastructure while focusing on capital formation. Golub notes that modular tokenization—where different stakeholders handle issuance, compliance, and distribution—will drive RWA scalability as the market matures.

Dubai’s RWA market is already demonstrating traction, with on-chain tokenized assets surpassing $25 billion as of mid-2025. However, this represents a fraction of global real-world assets, underscoring the sector’s infancy. VARA’s focus on governance, transparency, and operational resilience ensures that projects meet non-negotiable standards, including real-time verifiability and smart contract integrity. While the city’s high living costs and regulatory rigor pose challenges, the convergence of policy, infrastructure, and capital positions Dubai as a functional RWA hub. As White concludes, the regulatory framework is now in place—executing on its potential requires builders to tokenize assets and trade them on-chain, fulfilling a vision first outlined over seven years ago.