How the UAE drew the line on tokenized assets, and why it matters for the rest of the region

The UAE has answered a question most markets are still arguing about: What, exactly, is a token? The country’s capital market law overhaul, the Federal Decree-Law No. 33 of 2025 that took effect on 1 January 2026, classifies tokens by the asset inside them — not the blockchain wrapping them — and requires a separate license for each category. With Egypt still running a sandbox, and most of the GCC still dipping its toes in tokenized-backed assets, the UAE’s approach is well-positioned to become the benchmark the rest of the region will either adopt, adapt, or consciously reject.

The law reconstituted the old Securities and Commodities Authority as the new Capital Markets Authority and drew a hard line: Tokenized sukuk are still regulated as securities, and virtual assets are defined to exclude anything already classified as a security. The CMA’s regulatory power applies to security tokens and expressly excludes virtual assets, which fall under the jurisdiction of the Virtual Assets Regulatory Authority (VARA), Ola Sanni, a UAE-based associate at White & Case, tells EnterpriseAM.

“We don’t care what the technology is; we care what the asset is.” That’s how Soham Jathani, partner at UAE-based business legal and strategy advisory firm Septten Advisors, described the CMA’s stance to us. “If you say a token is a security, it does not matter that it is inside a token — an Apple share is still a security, and security rules apply,” Soham says.

That means a tokenized Apple share, a special purpose vehicle (SPV) unit backed by real estate, and a sukuk all enter the securities regime. Cryptocurrencies like Ethereum or Solana — tokens that carry no claim on an underlying instrument but are bought and sold as investments in their own right — sit in a separate virtual-asset track, Jathani says. A pure utility token that stays inside its own ecosystem, like airline loyalty points, does not trigger financial regulation at all, he adds.

SOUND SMART- Tokenization means recording ownership of an asset — a building, a fund unit, a bond, or even precious metals — as digital units on a blockchain rather than in a traditional registry or fund ledger. The token is a claim on the underlying asset: owning the token means owning that slice of it. The tokenization’s main pitch has been a widened access case: Lower minimums, more investors in. But there’s more: Full transaction traceability for every ownership change, verified data that sophisticated investors can use before deploying capital, and — for regulators — a digitized ledger that lets authorities measure and manage a sector that, in Egypt’s case with real estate, represents 10% of the GDP, and even 20% in some estimates.

That clarity matters because the rest of the region does not yet have it yet. “[Saudi] has not adopted an equivalent standalone security-token regime,” Ola Sanni tells us. And both Qatar and Bahrain have a framework on the books that are not yet tested in full.

The CMA framework was also designed to close a loophole that any market writing its own rules will have to address. During the 2016-2018 token-issuance boom, companies worldwide argued their tokens were utilities rather than securities to dodge tighter regulation — even when the tokens were plainly being sold as investment instruments. “Companies — and I was part of this effort back then — argued, ‘It’s not a security because we aren’t raising money on the token itself; the token is the key to unlocking features on our blockchain,’” Jathani says.

The CMA’s answer is to accept the premise and demand the proof: Issuers justify their classification case by case. If the regulator is not persuaded, the activity does not proceed, Jathani explains.

The regulator’s bottom-line diagnostic: “Are you asking someone to trust you with their money? That does not strictly mean holding their funds. Are you offering investment advice or suggesting a return? If the answer is even partially 'yes,' you likely require regulation.”

Why the asset class matters more than the tech

The virtual asset vs. a security split sounds clean on paper, but it gets complicated when the tokenized asset is physical rather than financial. That is where the regulatory learning becomes most relevant to the rest of the region, because real estate is the asset class driving most tokenization activity from Dubai to Cairo.

A tokenized sukuk can sit within securities law and preserve established SPV or trust structures, with the token recording rights in the underlying instrument. Tokenized real estate raises a different question. “Its effectiveness ultimately depends on land-registry law and whether the relevant registry framework recognizes the tokenized record as evidence of title or transfer,” Sanni says. The CMA rules reflect this by excluding real-world assets unless the tokenized asset represents a security.

Real estate tokenization can take two fundamentally different paths, and the regulatory treatment depends on which one you choose. The first is registry-native or civil law Dubai’s Land Department tokenizes title deeds directly on the government registry, with the token functioning as the ownership record because the state recognizes it. The Dubai Land Department (DLD) opened secondary-market trading for c. 7.8 mn property tokens on 20 February 2026 via platforms including PRYPCO Mint and Ctrl Alt. “This is a separate government-led infrastructure project, rather than part of the CMA security-token regime,” Sanni notes — meaning it lives outside the securities framework entirely.

The second path runs through an SPV. A platform that wants to fractionalize a portfolio of properties would typically transfer the title deeds into an SPV and sell shares of that vehicle. “You are not tokenizing houses directly; you are tokenizing SPV shares,” Jathani says. “If you sell shares, standard securities regulations apply.” That puts the platform squarely inside the CMA’s securities regime — a different regulator, a different licensing track, and different consumer-protection requirements than the DLD model.

The Egyptian company that followed the learning

REMEMBER- In our reporting on the evolution of securitization regulation in the region, the regulatory learning ran from Egypt to the Gulf — Egypt’s deep securitization market was the reference point for Saudi and UAE frameworks still being written. In tokenization, the direction reverses.

And when it comes to real estate tokenization, no company illustrates that flow more clearly than Nawy. Egypt’s largest proptech is pursuing multiple licenses simultaneously — a multi-tranche real estate fund structure and fintech license with Egypt’s Financial Regulatory Authority. And in the UAE, it is building a tokenization business under the UAE’s rules while assembling a structure in Egypt that delivers the same outcomes through entirely different regulatory plumbing.

ICYMI- Nawy acquired the UAE-based proptech SmartCrowd last year and secured an in-principle approval from VARA to launch a real estate tokenization platform earlier this year. SmartCrowd, however, operates under the Dubai Financial Services Authority (DFSA), which has a similar approach to the CMA but different from it, Sanni tells us.

The SmartCrowd acquisition is about getting ahead in the jurisdiction that already has those rules. “Acquiring SmartCrowd is a key step in expanding fractional ownership across the GCC,” Ayman Magdy, managing director of Nawy Shares, tells EnterpriseAM. “It lets us cross-introduce concepts over time — bringing rental yield models to Egypt and off-plan fractionalization to the UAE — subject to regulatory approval in each market,” he adds. Whether SmartCrowd will tokenize directly onto the DLD registry or use an SPV model is still being worked out, Magdy says.

In Egypt, Nawy has been operating under a traditional fractionalization framework for the last few years. It launched its fractional real estate business in 2023, dividing properties into 20 to 40 shares with down payments as low as EGP 20-25k (USD 380-480). Assets under management sit at around EGP 10 bn (USD 190 mn) with more than 7k active investors, Magdy says.

The model ran on Egyptian civil law — preliminary sale contracts — but is now shifting into a purpose-built regulatory structure. “We’ve worked with the FRA to adapt the Nawy Shares business model into real estate fund regulations,” Magdy says. The result is a multi-tranche real estate fund. “[That] setup allows us to release properties unit-by-unit on a tranche basis. A separate licensed asset management company manages these assets. This entity holds receiving, promotion, and subscription licenses, alongside a fintech license," he explains. “The fund is live and operating under full FRA supervision. The one outstanding licence is the fintech license, which will let us provide a more streamlined experience for investors with digital KYC, e-signatures and more,” he tells us.

This new structure will make Nawy tokenization-ready for what Egypt may have in the works — not through title-deed tokens, but through a real estate fund. In this model, investors will get investment certificates registered with Misr Clearing, replacing the preliminary paper contracts the model launched with, with net asset values reassessed every six months by an independent valuer registered with the CBE or the FRA, Magdy tells us. And the recent changes in real estate funds rules paves the way. The FRA extended the maximum fund lifespan from five years to as long as 20, matching the 12- to 15-year payment plans that dominate Egypt’s off-plan market. The result is a digital, registry-recorded, independently valued ownership instrument with a secondary market on the way — a structure that could absorb blockchain-based settlement with relatively little retrofitting if Egypt eventually writes tokenization rules of its own, Magdy says.

IN CONTEXT- Egypt is not running a registry-focused tokenization experiment. It is going right away to securities. Granite and Tarmiiz's FRA sandbox — a distributed ledger running alongside a centralized ownership register for a money market fund — is Egypt’s one live tokenization experiment. It tests infrastructure, not market access, and does not cover real estate. It signals the FRA’s willingness to let the technology prove itself before writing permanent rules, but it is a long way from the comprehensive framework the UAE already has.

The cross-border wall

A tokenized sukuk issued under one jurisdiction’s rules “has no automatic right to be held or traded in another jurisdiction in the region,” Sanni tells us. Recognition depends on whether the receiving jurisdiction recognizes the offering and issuer, whether custody and settlement systems can interoperate, and which law governs title, finality, and insolvency. “There is no established GCC-wide reciprocal framework addressing those issues,” he adds.

Jathani puts a timeline on it: Another five years. “Cross-border trade requires home regulators to become comfortable within their domestic markets before establishing arrangements with international counterparts,” he says. “Cross-border integration will occur when tokenized asset investments reach a critical mass that forces international cooperation and standardized global rules. We have not reached that threshold yet,” Jathani tells us.

How would the sequence look like? “The next step would be mutual recognition of regulated issuers and custodians, consistent conflict-of-laws rules for digital securities and interoperable cross-border settlement infrastructure,” Sanni says.