UAE virtual assets and DeFi: what changed in October 2026

October 2026 brought a series of regulatory developments for the virtual asset businesses in Dubai and firms operating in Abu Dhabi Global Market (ADGM). Dubai’s Virtual Assets Regulatory Authority (VARA) updated parts of its token issuance framework and published guidance on reserve audits and public disclosure. In ADGM, the Financial Services Regulatory Authority (FSRA) opened consultation on how regulated firms should manage the risk of engaging with decentralised finance, commonly known as DeFI.

Although the developments address different activities, they share a common theme: accountability.

Regulators expect firms to explain their products clearly, demonstrate how assets are protected and maintain effective oversight of the technology they use.

The FSRA’s DeFi proposals remain open for comment until 30 November 2026.

Understanding the regulatory landscape

The UAE’s virtual asset sector operates across several regulatory jurisdictions, so the starting point for any business is identifying which framework applies to its activities.

VARA regulates virtual asset activities in Dubai, excluding the Dubai International Financial Centre (DIFC). Its remit includes token issuance and the activities of licensed virtual asset service providers, or VASPs.

The FSRA, meanwhile, regulates authorised firms, recognised exchanges and clearing houses within ADGM.

The DIFC has a separate regulator, the Dubai Financial Services Authority (DFSA), while relevant federal requirements, including anti-money-laundering rules, also need to be considered.

The October developments should therefore be read in the context of each firm’s location, permissions and business model, rather than as a single set of rules applying across the UAE.

Token issuance: the importance of clear, accessible information

VARA updated the whitepaper requirements in its Virtual Asset Issuance Rulebook on 12 October, followed by the Category 1 issuance provisions on 14 October. For businesses preparing a token launch, these updates make it important to review the current rulebook rather than rely on earlier summaries or existing document templates.

The framework distinguishes between three categories of issuance:

• Category 1 covers fiat-referenced tokens, such as stablecoins, and asset-referenced tokens, including those linked to real-world assets. Issuers require a VARA licence, with separate approval required before each fiat-referenced token is issued.
• Category 2 covers issuances made through a licensed distributor.
• Exempt: non-transferable tokens and redeemable closed-loop tokens.

Issuers outside the exempt category must publish both a whitepaper and a separate Risk Disclosure Statement. The whitepaper must meet the requirements in Schedule 1 of the rulebook, be machine-readable and be publicly available.

VARA’s non-binding guidance, published in April 2026, provides examples and templates to help issuers prepare these documents. Commentary cited in the draft highlights the importance of ranking risks by materiality, avoiding generic wording and allowing readers to access the whitepaper without having to register.

For issuers, the broader point is that a whitepaper is not simply a promotional document. It needs to explain the token and its risks in a way that supports informed decisions. Preparing it should involve checking the applicable requirements, confirming the token’s classification and recording the reasoning behind that classification.

Reserve audits and public disclosures: what happens in practice

Alongside the issuance updates, VARA published two circulars addressing the evidence firms provide about their reserves and the information they make available to the public. Both draw on supervisory reviews and explain VARA’s expectations without changing the underlying rules.

Auditing reserve assets: issued on 6 October, followed VARA’s review of Proof of Reserve Assets reports submitted in 2025. It sets out minimum expectations for independent reserve asset audits, with the aim of improving the consistency and detail of the evidence used to assess how client virtual assets are safeguarded.

Making public disclosures useful: issued on 28 October, concerns the website disclosures of licensed VASPs, rather than token issuers’ whitepapers. It followed a thematic review that began in June 2026. VARA identified disclosures that were incomplete, overly generic, difficult to find or inconsistent with the way a business actually operated. The circular’s examples include:

• explaining how quoted prices are set, rather than saying prices follow “market conditions”
• stating routing practices and whether any liquidity source takes 20% or more of client orders
• publishing the required details for each virtual asset offered, instead of linking to a third-party data site
• describing how client money and client virtual assets are protected, with specifics rather than the word “segregated”
• naming any third party that holds the firm’s own or its clients’ accounts, funds or assets

ADGM: a proposal on how regulated firms use DeFi

In ADGM, the FSRA published Consultation Paper No. 5 of 2026 on 6 October, seeking feedback on proposed DeFi Risk Management Guidance.

DeFi broadly refers to financial services delivered through blockchain-based smart contracts, including lending pools and decentralised exchanges. The proposed guidance focuses on how ADGM-regulated firms manage their involvement with these arrangements. It is not a proposal for a separate DeFi licence, nor does it approve or regulate the protocols themselves.

The proposals address ten areas: risk management, governance, due diligence, monitoring, financial crime controls, incident escalation, recordkeeping, auditability, competence and client asset safeguards. They also bring attention to the infrastructure on which DeFi depends, including smart contracts, oracles, bridges, stablecoins and tokenised claims.

In short firms regulated in ADGM cannot avoid responsibility just because they use decentralised technology rather than a traditional financial intermediary. The proposed guidance explains how the regulator expects those firms to manage the risks.

Looking Ahead

The overarching message from October’s regulatory sprints is simple: Using decentralized technology or issuing virtual assets in the UAE does not dilute institutional or structural responsibility.
Whether you are revising a whitepaper under VARA’s updated frameworks or assessing smart contract risk profiles for ADGM compliance, proactive engagement is your best strategy.