How can RWAs in the Middle East break through? A global testing ground, from capital-driven to regulatory implementation!

Here is the English translation: From "theoretically feasible" to "practically sustainable", RWA has passed its initial experimental phase and entered a new stage driven by policy and capital landing. The Middle East, with its triple overlay of "capital + resources + regulatory innovation", is rapidly becoming one of the global source points for real-world asset tokenization. In comparison, the United States innovates through evidence-based approaches within stable regulatory logic, while Hong Kong and Singapore leverage their cross-border hub positions, collectively weaving a token-based map that is reshaping global finance. **Authors:** Chen Xiaoyun, Gui Ruofei ## 1. Introduction Real-world asset tokenization (RWA) is transitioning from concept verification to institutional implementation. In 2025, the United States will provide clear regulatory pathways for digital assets through laws like the **Genius Act**, while Hong Kong and Singapore continue to optimize licensing frameworks. The **Middle East, with its abundant capital, rich physical assets, and flexible regulatory strategies, is rapidly becoming an experimental ground for RWA innovation and implementation**. This wave is not just about asset tokenization, but about reshaping financial rules: those who can balance **compliance, innovation, and capital** may become the hub of global tokenized finance. The following analysis will comprehensively examine the market landscape and opportunities by exploring the growth drivers, regulatory framework, and typical implementation projects of RWA in the Middle East. ## 2. Reasons for RWA Development in the Middle East **▍2.1 Abundant Capital Seeking New Outlets** As of October 2024, several sovereign wealth funds headquartered in Abu Dhabi (including ADIA, Mubadala, ADQ, Abu Dhabi Development Fund, Tawazun, and the UAE Investment Authority) collectively manage assets of approximately **1.7 trillion USD**. These funds have accumulated massive capital reserves through the oil economy but are no longer satisfied with concentrating funds on low-risk products like US Treasury bonds or relying entirely on traditional banking systems. In asset allocation, sovereign wealth funds from Gulf countries (such as Abu Dhabi's ADIA and Saudi Arabia's Public Investment Fund) are participating in global investments through **SPVs**, including China's new infrastructure projects—for example, ADIA's participation in Ant Group's RWA project, exploring the combination of digitization and traditional finance. RWA, with its **digital nature, flexible structure, and relatively stable returns**, perfectly meets these funds' investment needs of "seeking innovation while maintaining stability", becoming an important capital allocation direction. [The translation continues in this manner, maintaining the specified terminology and structure.]

3. Regulatory Status of RWA in the Middle East

▍3.1 Dubai International Financial Centre (DIFC)

The RWA regulation in Dubai International Financial Centre is managed by its Financial Services Regulatory Authority (hereinafter referred to as DFSA). In 2025, DFSA officially incorporated asset tokenization into its regulatory framework and released the Tokenisation Regulatory Sandbox Guidelines, clarifying the regulatory classification and corresponding framework for security tokens and derivative tokens. This move means that RWA projects are no longer in a regulatory gray area in DIFC, providing a clear and compliant basis for RWA token issuance and trading.

In the Tokenisation Regulatory Sandbox Guidelines, DFSA introduced a phased pilot mechanism for RWA projects. In the first phase, project teams first submit a letter of intent to DFSA for initial assessment. After passing the initial assessment, projects enter the 6-12 month Innovation Testing Licence (ITL) phase, during which tested projects can enjoy partial capital requirements and prudential obligation exemptions, but still need to undergo DFSA's continuous monitoring of information disclosure, distributed ledger security, and asset custody. At the end of the testing period, project teams must apply for a formal license or voluntarily exit the market, otherwise they will be strictly cleared out by DFSA.

Overall, DFSA maintains an "actively open and prudently compliant" attitude towards RWA, actively exploring RWA innovation and providing project teams with a pilot mechanism that can be practically implemented.

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QCDT will digitize traditional money market fund shares on-chain, with the fund share rights represented and circulated through blockchain tokens. Therefore, investors can obtain the same income rights as traditional fund holders by purchasing QCDT tokens. At the same time, the project is very cautious in its compliance design. On July 8, 2025, DFSA officially approved the issuance license for QCDT, making it one of the first regulated tokenized money funds in DIFC. Therefore, from token issuance to circulation, QCDT strictly adheres to the regulatory framework specified by DIFC. The project's whitepaper also clearly states that all asset allocations and transactions are conducted under the fund framework regulated by DFSA, and has established strict anti-money laundering and information disclosure systems.

From these two examples, it can be seen that whether it is RWA of physical assets or financial assets, RWA projects in the Middle East have already begun to be formally implemented and have made substantial progress. However, these RWA projects that are being or have been implemented are mainly concentrated in Dubai's issuance and operation, while other Middle Eastern countries like Saudi Arabia, due to conservative regulatory strategies, are significantly behind Dubai, which has an open attitude towards the crypto world.

5. Comparison between the Middle East and regions like Hong Kong and the United States

▍United States

Against the backdrop of rapid global real-world asset tokenization (RWA), the US regulatory path presents a progressive model based on traditional securities law. Unlike the "regulatory sandbox + industry incentives" strategy of Hong Kong and Dubai, the US tends to extend jurisdiction through existing legal frameworks, supplemented by targeted legislative proposals to ensure financial stability and investor protection.

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By the second half of 2025, we will see more and more RWA projects moving from the "institutional vision" to "investment products", and from "on-chain experiments" to "market compliance". Whoever can first find a foothold between regulatory compliance and innovative efficiency will gain the upper hand in building the next generation of financial infrastructure.

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