The UAE Securities and Commodities Authority (SCA) has called for feedback on the draft regulation on securities contracts and commodity tokens by February 14, 2025.

The UAE Authority noted that security tokens include equity tokens, bond tokens, sukuk tokens, while commodity tokens include examples of gold tokens, oil tokens, and others.

It is noted that both security tokens and commodity tokens are created on Blockchain/DLT platforms, with security tokens representing financial or tangible assets, and commodity tokens representing physical goods.

The UAE Drug Control Authority also noted that these tokens can be traded on virtual asset DLT platforms, with the transfers of these tokens being governed by the provisions of the registration agreement.

Securities and commodity token contracts can only be traded and settled through a market or alternative trading facility, while bonds and sukuk can be traded and settled over the counter.

UAE SCA and Dubai VARA coordinate on VASP rules

In September 2024, the Securities and Commodities Authority (SCA) signed a cooperation agreement with the Dubai Virtual Asset Regulatory Authority (VARA), which agreed that VASPs operating in or from Dubai or wishing to service the emirate of Dubai must obtain a license from VARA and can be registered by default with the SCA to service the wider UAE. VASPs wishing to operate from any other emirate must obtain a license from the SCA to do so.

The UAE SCA’s regulation of securities and commodity tokens comes after the new leadership of the US Securities and Exchange Commission (SEC) announced the creation of a task force to develop a regulatory framework for crypto assets, just a day after President Trump’s inauguration, in an attempt to overhaul cryptocurrency policy in the United States. The task force is charged with developing clear pathways for the registration of crypto assets, frameworks, and clarity on when crypto tokens are considered securities.

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