UAE’s SCA creates provisions for tokens for securities and commodities

The SCA governing securities and commodities for the UAE has introduced new legislation regarding distributed ledger technology, specifically for securities and commodities tokens. 

The document listing the provisions recognises the utility and application of distributed ledger technology. It also highlights the different types of tokens available in today’s global markets for digital assets—commodity tokens, security tokens, equity tokens, bond tokens, gold tokens, and oil tokens. 

The scope of the new regulations extends to token contracts, recording and trading through the distributed ledger, and requirements for security tokens and commodity tokens. 

The amendments give users of this new technology recourse to the SCA in case of complaints and grievances. The SCA gets more authority, allowing it to request any required information and data. 

Administrative powers are included, giving the SCA the permission to suspend any processes relating to offering, issuance, subscription, or registration. The SCA may cancel investors’ subscriptions and call on the authorities to repay subscribers. 

This piece of legislation comes at a critical time for the region, as the U.A.E. adopts a tempered but active approach to cryptocurrency and digital assets.

Apart from the SCA’s involvement in digital assets, VARA—Virtual Assets Regulatory Authority—continues to handle all regulatory matters related to cryptocurrency.

Earlier in September 2024, the SCA and VARA signed an agreement under which both regulatory bodies would cooperate to set up a framework governing digital assets as per an official SCA media release. This signing ceremony was done in alignment with the UAE’s aspiration to position the country as a competitive region for digital assets.