After releasing draft rules in January 2025 under the title “Security Tokens and Product Token Contracts,” the UAE Securities and Products Agency released full regulations on security and product contract tokens.
According to the announcement, regulations ensure that securities contracts, including those issued using distributed ledger technologies (such as security tokens and merchandise contract tokens), are housed within the existing virtual asset regulation framework.
The UAE SCA provides explanations on the types of tokens and obligations
The UAE SCA defined security tokens and commodity contract tokens as digital representations of assets such as companies, stocks, and bonds that have the same investor protection and regulatory oversight as traditional securities. Examples provided by the UAE SCA during the consultation process included gold and oil tokens.
This regulation provides consistent treatment for securities and product contracts regardless of the technology used in issuance and transmission.
This approach is intended to address and mitigate the risks that may arise from the use of distributed ledgers
Technology while maintaining the integrity and purpose of the regulatory system. This regulation is technical agnostic in accordance with the UAE SCA.
Therefore, as explained, if a security or merchandise derivative contract is issued, authorized or not permitted, as authorized, as otherwise described, as electronic records, or DLT (Distributed Ledger Technology) code.
However, a distributed ledger must meet requirements such as the debtor rather than the debtor, and the ability to use to grant the authority to dispose of his rights. Second, its integrity is ensured by appropriate technical and organisational measures to protect against unauthorized changes.
Finally, rights content, ledger operations, and registration agreements are recorded in distributed ledgers or linked attached data, but the debtor can view relevant information and ledger entries and verify the integrity and accuracy of the content associated with them without third-party interference.
Security and commodity tokens can only be traded via crypto wallets
New securities and goods token regulations allow transactions of such tokens only through counters, either through digital wallets provided by digital wallets provided by digital wallets, or through self-managed wallets that must be whitelisted by obligations or markets or digital wallet service providers or compliance middleware service providers.
According to the UAE SCA, digital wallets are software applications or other tools used to control, protect, or manage public and private encryption keys (or equivalent). Digital wallet service providers, on the other hand, are markets or entities licensed to operate alternative trading systems that provide storage services for security or merchandise contract tokens by managing public and private encryption keys.
Emirates Coin Investment may issue security and product tokens first
In June, Emirates Coin Investment LLC (EMCOIN), based in the United Emirates of Abu Dhabiara, announced that it has become the first UAE SCA regulated integrated investment platform to provide traditional assets such as crypto investments and stocks, commodities and even ICOs.
Emcoin pointed out that it will launch a cutting-edge investment platform that brings together digital assets and traditional funds. Users can trade virtual assets, invest in UAE and global stocks, purchase products, and access professionally managed portfolios with complete transparency and trust.
The UAE has already begun to tokenize real estate assets for investment purposes. Prypco Mint, a joint initiative of Prypco, authorized by the Dubai Land Department (DLD) and the Virtual Asset Regulator (VARA), has already listed and funded two tokenized properties in the UAE to date.
