Virtual Asset
Definition
A virtual asset is a digital representation of value that can be digitally traded, transferred, or used for payment or investment purposes. Under the Virtual Assets and Related Activities Regulations 2023, the Virtual Assets Regulatory Authority (VARA) uses this definition to establish the scope of its regulatory jurisdiction in the Emirate of Dubai.
The definition of “virtual asset” is foundational to VARA’s entire regulatory framework. Whether an entity’s activities fall within VARA’s jurisdiction depends on whether the assets involved meet this definition. The classification determines licensing requirements, compliance obligations, and enforcement applicability.
Scope of the Definition
VARA’s definition of virtual asset broadly encompasses:
- Cryptocurrencies: Bitcoin, Ethereum, and similar decentralised digital currencies that operate on distributed ledger technology
- Utility Tokens: Digital tokens that provide access to a specific product or service within a blockchain ecosystem
- Security Tokens: Tokenised representations of traditional securities such as equity, debt, or investment fund interests
- Asset Reference Tokens: Virtual assets backed by real-world assets, for which VARA published specific issuance rules in October 2023 — described as “the first-of-its-kind regulatory position on issuance of specific categories of Virtual Assets backed by Real World Assets”
- Stablecoins: Virtual assets designed to maintain a stable value relative to a reference asset, subject to additional requirements involving coordination with the Central Bank of the UAE (CBUAE) for payment token services
- Non-Fungible Tokens (NFTs): Depending on their characteristics and use, some NFTs may fall within the virtual asset definition
Exclusions
Certain digital representations are typically excluded from the virtual asset definition under international standards that VARA follows:
- Central bank digital currencies (CBDCs) issued by sovereign monetary authorities
- Digital representations of fiat currencies that function solely as digital payment mechanisms
- Securities that are already regulated under existing securities legislation (though tokenised securities may fall within VARA’s scope)
Regulatory Significance
The virtual asset definition triggers several regulatory consequences:
Licensing Requirements
Any entity providing services involving virtual assets in or from Dubai (excluding the DIFC) must obtain a VARA licence. VARA has taken enforcement action against more than 36 entities for conducting unlicensed virtual asset activities, including Vesta Prime Portal (January 2026), UAEC Digital Fintech (August 2025), and Morpheus Software Technology (FUZE) (August 2025).
Activity Categories
VARA defines seven categories of regulated virtual asset activities: advisory services, broker-dealer operations, custody services, exchange operations, lending and borrowing, payment and remittance services, and VA management and investment services. Licensed entities such as Binance Dubai, OKX Middle East, BitOasis, and Crypto.com Dubai operate under specific activity authorisations.
Compliance Obligations
Virtual asset classification subjects entities to VARA’s compliance framework, including AML/CFT programme requirements, Virtual Assets Travel Rule implementation, marketing regulations, and consumer protection standards.
Alignment with International Standards
VARA’s virtual asset definition aligns with the Financial Action Task Force (FATF) definition established in FATF Recommendation 15 and its Updated Guidance on Virtual Assets and VASPs. The FATF defines a virtual asset as “a digital representation of value that can be digitally traded, or transferred, and can be used for payment or investment purposes.” This alignment is reflected in VARA’s circulars on FATF high-risk jurisdictions and Travel Rule implementation.
The ADGM FSRA in Abu Dhabi uses the term “virtual assets” within its Financial Services and Markets Regulations, while the EU’s MiCA regulation uses “crypto-asset” as its primary term. Singapore’s MAS uses “digital payment token.” These terminological differences reflect different regulatory scopes and approaches, compared in our international frameworks analysis.
Relationship to UAE Federal Law
The UAE Federal AML Decree-Law updated in November 2025 incorporates virtual assets within the federal AML/CFT framework, requiring all VASPs to conduct mandatory gap assessments. The SCA-VARA unified register ensures consistency in how virtual assets are treated across Dubai and federal contexts.
For the complete regulatory framework governing virtual assets in Dubai, see our VARA Framework section. For definitions of related terms, browse our glossary.
Evolving Definition and Market Development
The scope of what constitutes a virtual asset continues to evolve as new asset types emerge. VARA’s October 2023 asset reference token rules addressed the growing market for tokenised real-world assets, establishing regulatory treatment for virtual assets backed by physical assets including real estate, commodities, and financial instruments. The November 2023 creation of a new licence code for VA Issuance (Category 1) further expanded the regulatory framework to accommodate token issuance activities.
The definition also intersects with the Crypto-Asset Reporting Framework (CARF), which was the subject of a public consultation in October 2025. CARF uses its own definition of “crypto-asset” for tax reporting purposes, and the alignment between VARA’s definition and CARF’s scope has implications for how licensed VASPs implement tax information exchange obligations.
As Dubai’s virtual asset ecosystem matures — with approximately 21 licensed VASPs operating under VARA supervision — the practical boundaries of the virtual asset definition are tested by innovative products and services. DeFi protocols, wrapped tokens, staking derivatives, and governance tokens all present classification questions that VARA’s evolving framework must address.