KEYTAKEAWAYS
RWA in Web3 faces a critical global regulatory challenge: traditional financial hubs often classify it as a security, restricting liquidity and financing. However, Dubai's VARA breaks this mold by regulating RWA as a Virtual Asset, creating a dedicated compliance pathway that balances strict standards with the potential for public offering-grade circulation. Drawing from real project experience, this article analyzes why Dubai has become the optimal solution for global RWA compliance, its unique advantages, and potential risks, serving as a key reference for project teams.
TABLE OF CONTENTS
- KEY TAKEAWAYS
- Introduction
- Many RWAs Fail Not Due to Technology, But the Moment They Are Labeled “Securities”
- Dubai’s VARA Did Something Very “Counter-Intuitive to Traditional Finance”
- Why Dubai is the “Optimal Solution,” Not the “Most Lenient Solution”
- Why Dubai Will Become the Core Hub for RWA in the Next Few Years
- Dubai is Not a Panacea; You Can Still Fail Miserably
- If You Still Want to Do “Global Public Offering-Grade RWA” Now, the Realistic Options Are Few
- Conclusion
- DISCLAIMER
- WRITER’S INTRO
CONTENT
Introduction
To call RWA (Real World Assets) the “nuclear bomb” of Web3 is hardly an overstatement. It has detonated three battlefronts almost simultaneously: the asset side, the financing side, and most crucially, the regulatory side. Over the past two years, all the lively market discussions about “tokenizing everything” and “all assets can be RWA” have ultimately circled back to the same existential question: Legally speaking, what exactly is this thing?
Many have turned their attention to traditional financial hubs like Hong Kong, Singapore, and Europe. While this is not inherently wrong, those who have actually tried to launch projects often hit a very familiar wall midway. It is against this backdrop that Dubai is being taken seriously by a growing number of frontline projects, exchanges, and institutions. Not because it is “lenient,” but because at the institutional level, it has truly cleared a separate runway specifically for assets like RWA.
In this article, I don’t want to talk about visions or hype. I just want to clarify a few things I witnessed during the actual advancement of real projects.
Many RWAs Fail Not Due to Technology, But the Moment They Are Labeled “Securities”
Let me start with a scenario that almost every RWA project team has experienced.
The project team says:
“Ours is a functional RWA, not a security.”
The regulator retorts:
“Then prove it.”
The project team begins to explain:
“We have underlying assets, cash flow, profit distribution, buyback arrangements, and even price anchoring mechanisms.”
After listening, the regulator often replies with just one sentence:
“If anything, that makes you sound more like a security.”
This is not a joke; it is a real conversation that has played out repeatedly across different jurisdictions in recent years.
If you look at the realistic paths in major global legal regions, you will find a commonality: As soon as an RWA starts “promising returns,” the regulator’s first instinct is almost always to drag it into the securities framework.
The United States is the most 典型 example. The only reason INX and Securitize are still viable is that they admitted they were securities from the very beginning, following the mature but extremely costly path of Reg D, Reg S, and ATS.
Singapore is similar. As long as an RWA exhibits characteristics of asset mapping, profit distribution, or collective investment, the MAS rarely hesitates to bring it directly under the regulatory framework of Capital Markets Products (CMP).
Hong Kong is relatively flexible, but the premise is clear: it is basically limited to professional investors. You can do fund-type, STO-type, or security-type RWAs, but opening them up to retail investors is extremely difficult in reality.
The EU provides space for functional tokens under MiCA, but once an RWA has obvious yield attributes, securities laws remain an insurmountable barrier.
So the conclusion is very clear: Doing RWA in traditional financial jurisdictions essentially means spinning your wheels within the securities regulatory system.
This leads to a series of real-world consequences—retail investors are basically excluded, liquidity is restricted, exchanges are cautious, financing targets are highly institutionalized, project cycles are infinitely lengthened, and compliance costs skyrocket. This is why you see so many so-called RWA projects that end up being nothing more than “private fund shares on-chain,” lacking true circulation and impossible to offer publicly. The problem is not on the chain; it lies in the regulatory logic itself.
Dubai’s VARA Did Something Very “Counter-Intuitive to Traditional Finance”
The real turning point came with the emergence of Dubai’s VARA. The first key thing VARA did was not lower standards, but change the way of understanding the problem. Within VARA’s system, RWA was not presumptuously stuffed into the securities law framework, but directly brought under the regulatory category of Virtual Assets. The first question from the regulator is no longer “Are you a security?” but rather—”Are you a virtual asset project that can be regulated by VARA and subject to continuous auditing?”
This logical difference is crucial. It means that for the first time, RWA might not have to take the securities route first to enter a clear, systematic regulatory framework; it can apply for licenses following VASP logic; it can target retail investors under compliance prerequisites; and it finally has the institutional basis for “public offering-grade RWA.” Globally, this is a very rare institutional choice.
Why Dubai is the “Optimal Solution,” Not the “Most Lenient Solution”
It must be made clear: Understanding Dubai as “unregulated” is a very dangerous miscalculation. In terms of document complexity, AML/KYC intensity, technical compliance, custody requirements, and risk control standards, VARA is no less stringent than Hong Kong or Singapore.
The real difference lies in only one place—Dubai did not try to force-fit new assets into the logic of old finance, but designed a separate operable regulatory structure specifically for RWA.
The traditional path is:
Asset → Security → Licensed → Professional Investors → Limited Circulation.
The VARA path is more like:
Asset → Virtual Asset → VARA Compliance → Retail Accessible → Public Offering-Grade Circulation.
This is a difference at the level of regulatory paradigm, not a difference in the degree of strictness.
Why Dubai Will Become the Core Hub for RWA in the Next Few Years
If we ignore the slogans and only look at real-world driving forces, the answer is not complicated. What asset owners truly want boils down to a few things: the ability to raise capital, the ability to circulate, listing on compliant exchanges, access to retail investors, and legal validity. Looking at current global jurisdictions, there are very few places where these five conditions are met simultaneously, and Dubai is the clearest one.
You will also notice an increasingly obvious trend: In the past, Middle Eastern capital allocated to Western assets; now it is the opposite—more and more RWA projects with European and American backgrounds are actively moving their compliance hubs to Dubai. It is not that money is chasing projects, but that the regulatory structure is attracting projects.
In Hong Kong and Singapore, attitudes toward RWA are generally cautious; in the US, the risks of security-type RWA are almost explicit; but in Dubai, as long as you operate within the VARA framework, public offering-grade RWA is at least institutionally allowed to be discussed and implemented.
Dubai is Not a Panacea; You Can Still Fail Miserably
Having said that, a reality check is necessary. Dubai is not a tool to evade regulation, nor is it a “get-out-of-jail-free card.” In real projects, problems most often 集中 on several clichéd but easily overlooked points: unclear asset ownership, improper design of profit mechanisms, being deemed a collective investment scheme, conducting public offerings without a license, and triggering the securities laws of other countries through cross-border sales. These landmines do not automatically disappear just because you are in Dubai.
So a phrase I repeatedly emphasize in projects is: The value of Dubai is not in escaping regulation, but in providing a more suitable runway for RWA to run on.
If You Still Want to Do “Global Public Offering-Grade RWA” Now, the Realistic Options Are Few
I will make a cautious conclusion: Under the premise that the four conditions—”legally accessible to retail, listable on compliant exchanges, capable of true asset mapping, and having global expansion potential”—are met simultaneously, it is currently difficult to find a more realistic RWA compliance solution globally than Dubai’s VARA. It is not perfect, but in terms of risk controllability, cost predictability, regulatory matching, and commercial efficiency, it is indeed in the first tier.
Conclusion
Many people still simplify RWA as “Assets + Tokens,” but in the real world, what truly determines the life or death of a project is almost always legal structure and the ability to understand regulation.
Dubai’s greatest value is not its tax rates or freedom, but that it has, for the first time, given RWA an institutional answer that allows it to be open, compliant, institutional, and accessible to retail. This is why I say: Dubai RWA is indeed not a gimmick, but a reality that is being repeatedly verified.
