Written by Fraz Butt, Senior Director · SRA-regulated · Last reviewed 14 September 2026
A token’s regulatory classification depends principally on the rights, interests and economic characteristics it represents, rather than on the technology used to issue or transfer it. For example, a token referencing or providing rights in gold may fall within the regulatory perimeter applicable to commodities, investments or virtual assets depending on its structure. A token representing fractional ownership of real estate, a portfolio of loans or another pool of assets may constitute a Security, a Unit in a Collective Investment Fund or another regulated investment where the relevant legal and economic characteristics are present.
Tokens intended primarily for payment require separate analysis. Depending on their characteristics and the jurisdiction in which they are issued or used, stablecoins and other payment-related tokens may fall within the CBUAE’s payment-token framework, the DFSA’s Crypto Token framework — including its treatment of Fiat Crypto Tokens — or the FSRA’s regime for Fiat-Referenced Tokens.
In the UAE, both the classification of the token and the activities carried on in relation to it determine the applicable regulatory perimeter. Depending on the location and structure of the business, the relevant authority may include the federal securities regulator, VARA in Dubai outside the DIFC, the DFSA within the DIFC, the FSRA within ADGM, or the Central Bank of the UAE. The applicable licence or regulatory permission therefore needs to be assessed by reference to the token’s characteristics, the activities undertaken and the jurisdiction in which those activities are carried on.
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Why Classification Is the First Question, Not the Last
Tokenisation projects frequently start with the technology and structure the legal wrapper afterwards. That order of operations creates real risk: a token marketed as a simple “digital asset” can, on closer analysis, meet the legal test for a security or a fund interest, triggering prospectus, licensing and marketing restrictions the project never planned for. Getting the classification opinion early — before tokens are issued or marketed — is far cheaper than restructuring after investors are already on the register.
Gold and Commodity-Backed Tokens
. A token that represents rights in physical gold may, depending on its legal structure and economic characteristics, fall within the regulatory perimeter applicable to commodities, investments or virtual assets. Where the token gives the holder direct, identifiable and redeemable rights to allocated bullion, without pooled management or investment returns generated by a third party, it is less likely to resemble a conventional security or fund interest. The analysis may change where investor assets are pooled, the underlying gold is actively managed, returns or yield are generated, or holders rely materially on a manager or issuer to produce an investment return.
Real Estate Tokens
Tokenised real estate typically falls into one of two categories: a token representing direct fractional legal or beneficial ownership of a specific property, or a token representing an interest in a vehicle (an SPV or fund) that itself holds the property. The second structure — by far the more common in practice — is very likely to be treated as a security or fund interest, because investors are pooling capital and relying on a manager to generate returns. This has direct consequences for marketing: an unlicensed token sale that meets the test for a fund interest can expose the issuer to the same restrictions that apply to unauthorised fund marketing.
Private Credit and Fund-Interest Tokens
Tokens representing an interest in a private credit portfolio, a loan pool, or units in an existing fund are treated as securities or fund interests almost without exception, because they combine pooled capital, a return dependent on a manager’s efforts, and (usually) tradability. Tokenising an existing fund’s units does not remove the fund regulation that already applies to those units — it adds a layer of technology on top of an existing regulatory perimeter, and the token issuance itself may separately engage virtual asset rules for the platform used to trade it.
How ADGM and DFSA Approach the Classification
ADGM has taken a notably structured approach, extending its existing conventional regimes — including its derivatives and collective investment fund frameworks — to expressly capture digital-asset derivatives and tokenised fund interests, rather than creating an entirely separate rulebook. This means a tokenised fund in ADGM is generally regulated as a fund first, with the tokenisation layer addressed through the platform, custody and transfer arrangements. The DFSA similarly looks to the legal and economic characteristics of a tokenised instrument. Where the token represents an existing Investment — such as an equity, debt instrument, sukuk or Unit in a Collective Investment Fund — the regulatory requirements applicable to that Investment remain relevant. Separately, financial services involving Crypto Tokens are subject to the DFSA’s dedicated Crypto Token framework.
Structuring a Tokenisation Project Properly
A well-structured tokenisation project starts with a clear classification opinion covering the underlying asset, the rights the token confers, and how returns are generated and distributed. From there, the legal structure — SPV, fund, or direct ownership register — needs to interlock with the token’s technical design (transferability, redemption mechanics, on-chain governance rights) so that the smart contract does not inadvertently create rights or obligations the legal documents do not support. Custody and platform arrangements then need separate regulatory analysis, since the venue on which a security or fund-interest token trades may itself require a licence.
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Frequently Asked Questions / Questions & Answers
Is a gold-backed token regulated as a security in the UAE?
. Not necessarily. A gold-backed token must be classified by reference to the rights it confers and the structure of the arrangement. Direct, identifiable and redeemable ownership rights in allocated bullion may produce a different regulatory outcome from a pooled or managed structure designed to generate investment returns
Does tokenising real estate avoid fund regulation?
No. Tokenisation does not itself remove otherwise applicable securities or fund regulation. A token representing shares or other interests in a property-owning SPV may constitute a Security, while a structure satisfying the applicable Collective Investment Fund test may be regulated as a Fund. Direct tokenised ownership of property requires a separate analysisr fund interest and subject to the same regulatory requirements as a conventional fund investment.
Which UAE regulator oversees tokenised securities?
. The applicable regulator depends on the legal classification of the instrument, the activities undertaken and where those activities are carried on. Within ADGM, the FSRA regulates relevant Digital Securities, funds and associated activities. Within DIFC, the DFSA regulates Securities, Collective Investment Funds, tokenised Investments and Crypto Token-related financial services within its perimeter. Elsewhere in the UAE, the federal securities regulatory framework and, where applicable, Dubai’s Virtual Asset regime must also be considered
Can a tokenised fund be marketed to UAE retail investors?
Only if the underlying fund itself is structured and authorised for retail marketing — as a Public Fund, for example. Tokenisation does not change the marketing restrictions that already apply to the underlying instrument.
What is the first step in a tokenisation project?
Obtaining a clear legal classification opinion on the underlying asset and the rights the token confers, before any technical build or marketing begins. This determines the applicable regulator, licensing requirements and permitted investor base.
Speak to Saracens Dubai
Saracens’ Dubai Blockchain & Crypto team advises issuers, platforms and asset owners on the regulatory classification and structuring of tokenised real-world assets, from gold and real estate to private credit and fund interests.
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