The UAE’s Position as a Global Hub
for Token Sales

The United Arab Emirates (UAE) has established itself as a leading jurisdiction for blockchain and digital asset businesses, offering one of the world’s most sophisticated regulatory frameworks for token sales and launchpads. With the creation of the Virtual Assets Regulatory Authority (VARA) in Dubai, alongside frameworks provided by the Abu Dhabi Global Market (ADGM), Dubai International Financial Centre (DIFC), and the Securities and Commodities Authority (SCA), the UAE has positioned itself as a major global hub aligned with international standards such as FATF, SEC, and MiCA regulations.

The success of any token launchpad in the UAE hinges on regulatory compliance, corporate structuring, and the acquisition of appropriate licences. Improper structuring can result in regulatory enforcement, operational shutdowns, and significant financial penalties.

This guide offers a strategic legal roadmap for structuring a compliant token launchpad in the UAE, focusing on:

• The regulatory frameworks (VARA, ADGM, DIFC, SCA)

• Legal structuring strategies for AML, KYC, and securities law compliance

• Risk mitigation within the UAE’s evolving digital asset market

  
  

Understanding Token Launchpads and Their Regulatory Implications

What is a Token Launchpad?

A token launchpad is a platform that facilitates early-stage fundraising for blockchain projects, allowing investors to purchase tokens at discounted rates prior to public exchange listings. Common offerings include:

• Initial DEX Offerings (IDOs) via decentralised exchanges

• Initial Exchange Offerings (IEOs) via centralised exchanges

• Security Token Offerings (STOs) representing securities or real-world assets

  
  

Token offerings within the UAE are subject to jurisdiction-specific regulations, particularly where securities law may apply.

Examples of Well-Known Crypto Launchpads

• Centralised: Binance Launchpad, CoinList

• Decentralised: Polkastarter, DAO Maker, TrustSwap

  
  

Regulatory Framework:
Selecting the Right UAE Jurisdiction for Your Token Launchpad

VARA (Dubai Mainland & Free Zones)

VARA regulates virtual asset service providers in Dubai mainland and free zones.

• Best for: Retail-focused token sales, IDOs, NFT projects.

  
  

• Key licences: Virtual Asset Exchange Provider, Broker-Dealer Licence, Custody Services, and Proprietary Trading (requires a No Objection Certificate).

  
  

• Compliance highlights: AED 5M - 15M capital requirements, AML/KYC obligations, strict anti-market manipulation rules, and security measures like smart contract audits.

  
  

• Risks: Potential securities classification issues and the need for geo-blocking to avoid U.S. SEC oversight.

  
  

ADGM (Abu Dhabi Global Market)

Regulated by the Financial Services Regulatory Authority (FSRA), ADGM is geared toward institutional-grade platforms.

• Best for: Security tokens, institutional STOs, tokenised assets

• Key licences: Multilateral Trading Facility (MTF), Organised Trading Facility (OTF), Digital Asset Business Licence

• Compliance highlights: Strong corporate governance, investor protection rules, and distinction between security and utility tokens

• Risks: Unsuitable for retail-focused platforms, high compliance costs, and complex licensing process

  
  

DIFC (Dubai International Financial Centre)

The DIFC, regulated by the DFSA, bridges blockchain with traditional financial services.

• Best for: Hybrid fintech-blockchain structures, tokenised securities platforms

• Key licences: Authorised Firm Licence or FinTech Sandbox participation

• Compliance highlights: Financial governance, AML/KYC protocols, and cross-sector financial integration

• Risks: Not suitable for NFT or pure crypto launchpads; geared more towards institutional investors and tokenised financial instruments

  
  

SCA (Mainland UAE)

The SCA governs securities and investment activities onshore in the UAE.

• Best for: Security token sales targeting UAE-based investors

• Key licences: SCA Securities Promotion Licence, SCA Regulated Fund Licence, SCA-approved prospectus

• Compliance highlights: Pre-approval of security tokens, investor restrictions, and detailed disclosure obligations

• Risks: Limited flexibility for international projects; ADGM or DIFC may offer more efficient alternatives for STOs

  
  

Structuring a Token Launchpad in the UAE: Corporate & Legal Strategies

The optimal legal structure depends on several factors:

• Chosen jurisdiction (VARA, ADGM, DIFC, SCA)

• Type of token issued (utility vs. security)

• Whether the launchpad supports primary sales, secondary trading, or both

• Global regulatory considerations (e.g., SEC, MiCA, FATF compliance)

  
  

Dual-Entity Structure (Utility Tokens & IDOs)

For utility token-focused platforms, a dual-entity model is advisable:

• UAE-based licensed entity (under VARA, ADGM, DIFC, or SCA) for local operations and regulatory compliance.

• Offshore entity (BVI, Cayman, Seychelles) for token issuance and treasury management.

  
  

Benefits:

• Limits UAE securities law exposure

• Maintains local compliance while optimising tax efficiency

• Segregates token issuance from operational functions

  
  

Multi-Entity Structure (Institutional & STO Launchpads)

For institutional-grade or security token projects:

• UAE-regulated entity (ADGM, DIFC, or SCA) for licensing and compliance

• Offshore treasury entity for token issuance and liquidity management

• Intellectual Property (IP) holding entity in a jurisdiction like Ireland, Singapore, or Switzerland

• Foundation or DAO in Panama, Switzerland, or Liechtenstein for decentralised governance

  
  

Benefits:

• Ensures compliance with UAE and offshore regulatory requirements

• Protects intellectual property while maintaining tax efficiency

• Supports decentralised governance models (DAO/foundation structures)

• Positions platform for institutional investment

  
  

Key Legal & Compliance Considerations for UAE Token Launchpads

UAE token launchpads must comply with a robust legal framework to avoid severe regulatory, operational, and financial consequences. This framework includes AML/KYC obligations, minimum capital thresholds, and adherence to global securities and financial laws.

AML/KYC Compliance

• Investor identity verification

• Source of funds validation

• Ongoing transaction monitoring and suspicious activity reporting

  
  

Capital & Financial Requirements

• Minimum capital requirements range between AED 5M - 15M depending on the licence and regulatory body

• Regular financial audits and submission of reports to regulators

• Segregation of client assets from operational accounts

  
  

Market Conduct & Anti-Manipulation Regulations

• Prohibition of wash trading and insider trading

• Full risk disclosures in whitepapers and investor agreements

• Compliance with UAE’s anti-market manipulation rules

Cross-Border Regulatory Compliance

Token launchpads in the UAE are subject to international obligations:

• SEC (USA): Geo-block U.S. investors or apply for exemptions such as Regulation D or Regulation S

• MiCA (EU): Comply with European crypto asset regulations if targeting EU investors

• FATF AML guidelines: Implement global anti-money laundering standards

  
  

Regulatory Risks & Mitigation Strategies

Failure to implement compliant structures can expose platforms to regulatory penalties and enforcement actions.

Common risks include:

• Incorrect token classification: May result in securities law violations; conduct a legal classification analysis pre-launch.

• Selling tokens to U.S. investors: Without SEC exemptions, this invites enforcement and possible asset seizures; implement geo-blocking.

• Non-compliant transactions: May lead to banking restrictions; enforce strong transaction monitoring and AML screening protocols.

  
  

Final Thoughts

The UAE offers a dynamic, well-regulated environment for token launchpads, but success depends on strategic structuring and full compliance with local and international legal frameworks. Whether operating under VARA, ADGM, DIFC, or SCA, your platform must align with AML/KYC rules, investor protection standards, and global securities regulations.