The UAE Securities and Commodities Authority has introduced comprehensive regulations for security and commodity tokens, establishing clear rules and investor protections.
Definition of Tokens and Legal Aspects
The UAE SCA has defined security tokens and commodity contract tokens as digital representations of assets like companies, shares, and bonds, providing the same investor protections and regulatory oversight as traditional securities. Examples cited during consultations include gold tokens and oil tokens.
The regulations ensure consistent treatment for securities and commodities contracts, regardless of the technology used for their issuance and transmission.
Trading Tokens via Digital Wallets
The new regulation for security and commodity tokens allows their trading exclusively over the counter through digital wallets. These wallets must be provided by licensed service providers and pre-approved before use in the market. According to the UAE SCA's definition, a digital wallet is a software application used to manage cryptographic keys.
Future of Tokens in the UAE
Emirates Coin Investment LLC (EmCoin) based in Abu Dhabi may become the first UAE entity to issue security and commodity tokens. The EmCoin team announced the launch of a new investment platform for trading crypto assets and traditional financial instruments. The UAE is also actively involved in tokenizing real estate assets for investment purposes.
The new token regulation in the UAE creates a legal framework that ensures investor protection and market stability in dealing with digital assets.
