sca federal securities tokenization rules

table of contents

1. sca institutional overview
2. legislative foundation
3. decision no. 23/r.m of 2020
4. token classification framework
5. fintech regulatory sandbox
6. licensed and registered companies
7. capital market infrastructure
8. enforcement and violations
9. international cooperation
10. implementation trajectory

sca institutional overview

The Securities and Commodities Authority — now officially branded as the Capital Market Authority (CMA) — serves as the UAE’s federal securities and commodities market regulator. Established under Federal Law No. 4 of 2000, the SCA exercises jurisdiction over securities and commodities markets throughout onshore UAE, excluding the financial free zones of ADGM and DIFC. The authority’s mandate encompasses market regulation, investor protection, market development, and the licensing and supervision of market participants.

The SCA’s institutional evolution reflects the broader development of UAE capital markets. From its original mandate overseeing traditional equity and commodity markets, the authority has progressively expanded its scope to encompass new financial products and technologies. The entry into virtual asset and tokenized securities regulation represents the latest phase of this evolution, bringing the SCA into direct engagement with blockchain technology and digital asset markets.

The SCA’s approach to tokenized assets is grounded in its existing securities regulatory expertise. Rather than creating an entirely new regulatory framework for tokenized assets, the SCA has adapted its existing securities regulation apparatus to accommodate digital representations of traditional securities and new forms of crypto assets. This approach provides regulatory continuity for market participants familiar with the SCA’s framework while introducing necessary modifications to address the unique characteristics of tokenized instruments.

The SCA is headquartered in Abu Dhabi and operates regional offices serving the broader UAE territory. The authority reported record growth in January 2026, citing expanding market activity and increasing regulatory engagement. H.E. Waleed Al Awadhi serves as CEO and has led the authority’s engagement with virtual asset regulation.

legislative foundation

The SCA’s tokenization regulatory framework rests on multiple legislative pillars. Federal Law No. 4 of 2000 Concerning the Emirates Securities and Commodities Authority and Market provides the foundational authority for securities market regulation. Federal Decree-Law No. 32 of 2021 on Commercial Companies governs corporate structures including those used for tokenized asset operations. Cabinet Decision No. 111 of 2022 designates the SCA as the federal authority for VASP licensing in onshore UAE.

The interplay between these legislative instruments creates a layered regulatory architecture. The foundational securities law provides the SCA’s general regulatory powers, the commercial companies law governs corporate governance, and the Cabinet decision on VASPs establishes the specific framework for virtual asset regulation. The SCA’s implementing regulations and circulars provide operational detail within this legislative structure.

The SCA’s regulatory publications, available through the authority’s regulations listing page, include general regulations applicable to all market participants and specialized regulations addressing specific activities including crypto asset operations.

decision no. 23/r.m of 2020

Decision No. 23/R.M of 2020 on Crypto Assets represents the SCA’s primary regulatory instrument for crypto asset activities. The decision establishes the classification framework for crypto assets, licensing requirements for entities engaged in crypto asset activities, conduct rules governing crypto asset operations, and reporting and compliance obligations.

The decision predates Cabinet Decision No. 111 of 2022, which subsequently provided the federal-level framework for VASP regulation. The interaction between these two instruments has required careful interpretation. Decision No. 23/R.M establishes detailed operational rules, while Cabinet Decision No. 111 provides the overarching federal mandate. The SCA has issued subsequent circulars clarifying the relationship and confirming that Decision No. 23/R.M continues to apply within the framework established by Cabinet Decision No. 111.

Key provisions of Decision No. 23/R.M include mandatory licensing for all crypto asset activities conducted in onshore UAE, fitness and propriety requirements for directors and senior management of crypto asset firms, technology governance standards for crypto asset platforms and custody systems, client asset protection requirements including segregation of client and proprietary assets, and market conduct rules prohibiting manipulation, insider trading, and other abusive practices in crypto asset markets.

token classification framework

The SCA’s token classification framework distinguishes between security tokens, utility tokens, and payment tokens, with each classification triggering different regulatory requirements. Security tokens — digital representations of traditional securities including equity, debt, and fund interests — fall squarely within the SCA’s existing securities regulatory jurisdiction and are subject to the full range of securities regulations including prospectus requirements, disclosure obligations, and secondary market trading rules.

Utility tokens, which provide access to a product or service rather than representing an investment or payment instrument, are subject to lighter regulatory treatment but are not entirely exempt from SCA oversight. The SCA assesses utility tokens on a case-by-case basis to determine whether their economic substance is genuinely utility-focused or whether they exhibit characteristics of disguised securities.

Payment tokens fall primarily within the regulatory jurisdiction of the CBUAE rather than the SCA, reflecting the central bank’s mandate over payment systems and monetary instruments. The stablecoin regulatory analysis examines how payment token regulation is divided between the SCA and CBUAE.

The classification framework has significant practical implications for token issuers. A tokenized real estate investment, for example, would likely be classified as a security token and subject to the full SCA securities regulatory framework. A tokenized loyalty point might be classified as a utility token and subject to lighter regulation. A dirham-backed stablecoin would be classified as a payment token and regulated primarily by the CBUAE.

fintech regulatory sandbox

The SCA’s FinTech Regulatory Sandbox, accessible through the SCA regulations page, provides a controlled testing environment for innovative financial technology products and services including tokenized asset platforms. The sandbox allows firms to test their products with real customers under modified regulatory requirements, reducing the time and cost of bringing innovative products to market while maintaining consumer protection standards.

The sandbox program reflects the SCA’s recognition that blockchain-based securities products require regulatory accommodation during the development and testing phase. Sandbox participants operate under time-limited authorizations with specific conditions including limitations on the number of customers, transaction values, and geographic scope.

The SCA sandbox operates alongside similar programs at other UAE authorities. ADGM’s RegLab and DFSA’s Innovation Testing License serve comparable functions within their respective free zones. The regulatory sandbox comparison examines how these programs differ in scope, eligibility, and outcomes.

licensed and registered companies

The SCA maintains publicly accessible registers of licensed companies and registered companies operating under its regulatory jurisdiction. These registers provide transparency into the regulated market and enable investors and counterparties to verify the licensing status of firms before engaging in transactions.

As of early 2026, the licensed company register includes both traditional securities firms that have expanded into tokenized asset activities and new entrants licensed specifically for crypto asset operations under Decision No. 23/R.M and Cabinet Decision No. 111. The register is updated regularly as new licenses are granted and existing licenses are modified or revoked.

The SCA also maintains a violations database documenting regulatory enforcement actions. This database provides important intelligence on the types of conduct that the SCA considers non-compliant and the sanctions imposed for violations, informing compliance planning for regulated entities.

capital market infrastructure

The SCA regulates the capital market infrastructure that supports tokenized securities trading, including the Abu Dhabi Securities Exchange (ADX) and the Dubai Financial Market (DFM). Both exchanges have explored and in some cases implemented blockchain technology for post-trade processes, with the potential for tokenized securities listing and trading on regulated exchange platforms.

The integration of tokenized securities into the existing exchange infrastructure is a complex regulatory and technical undertaking. It requires modifications to listing rules, trading system architecture, post-trade settlement processes, and custody arrangements. The SCA has engaged with both exchanges on these developments and is developing regulatory guidance to facilitate tokenized securities listing while maintaining market integrity standards.

enforcement and violations

The SCA’s enforcement framework for tokenized asset activities draws on both its existing securities enforcement powers and the specific enforcement provisions established under Cabinet Decision No. 111 and Decision No. 23/R.M. Enforcement actions can include administrative sanctions (fines, warnings, license conditions), suspension or revocation of licenses, referral for criminal prosecution in cases involving fraud or money laundering, and publication of enforcement outcomes in the violations database.

The SCA’s enforcement approach has emphasized proactive market surveillance and early intervention. The authority’s December 2025 announcement that it is “charting the future of the financial sector with innovative risk-assessment methodology” suggests the development of enhanced supervisory tools including data analytics and algorithmic surveillance capabilities.

international cooperation

The SCA is a member of the International Organization of Securities Commissions (IOSCO), the Union of Arab Securities Authorities (UASA), the Islamic Financial Services Board (IFSB), and the Association of National Numbering Agencies (ANNA). These memberships facilitate international regulatory cooperation and information sharing relevant to cross-border tokenized asset activities.

The SCA’s October 2025 MoU with the DFSA to strengthen cooperation on auditor oversight illustrates the authority’s approach to bilateral regulatory cooperation. While this specific MoU addresses auditor regulation rather than tokenized assets directly, it demonstrates the institutional framework for cross-authority cooperation that supports effective multi-authority supervision of the tokenized asset market.

In November 2025, the SCA hosted the AMERC Plenary Meeting in Abu Dhabi, chaired by H.E. Waleed Al Awadhi, demonstrating the authority’s leadership role in regional securities regulatory cooperation.

implementation trajectory

The SCA’s tokenization regulatory framework is expected to continue developing through 2026 and beyond. Key implementation milestones include additional implementing regulations for Cabinet Decision No. 111, development of standards for tokenized securities listing on UAE exchanges, enhanced guidance on the classification of complex token structures, expansion of the FinTech Regulatory Sandbox to accommodate additional tokenization use cases, and deepening cooperation with VARA, ADGM FSRA, and DFSA on cross-jurisdictional matters.

The SCA implementing regulations progress brief tracks the development timeline. The regulatory framework tracker dashboard provides real-time monitoring of implementation milestones across all UAE authorities. For the broader federal context, see the Cabinet Decision No. 111 analysis and the CBUAE virtual asset regulations analysis.

For official SCA information, visit sca.gov.ae.