Author: Mankun Blockchain Law

Since 2024, RWA (Real-World Assets, Real-World Assets) has become a hot topic in Web3 and traditional financial digitalization. From real estate tokens, notes, supply chain finance, to tokenization of bonds and fund shares, more and more project parties and capital are beginning to find channels for compliance implementation around the world.

On March 17, 2025, the Dubai Financial Services Authority (DFSA) released the "Tokenisation Regulatory Sandbox Guide", which for the first time clearly included tokenization in the regulatory focus and launched an innovative test licensing mechanism (ITL), releasing a realistic, clear and practical compliance path.

At present, the intent application window is open, only from March 17 to April 24, 2025. Therefore, for the RWA project parties who plan to go overseas, this path is an important option worth paying attention to and grasping at the current stage.

This guide clearly states that DFSA has included Tokenised Investments in the regulatory system and specifically distinguished tokens into:

Security Token (Security Token)

Derivative Token (Derivative Token)

In this way, tokenized assets will no longer be in the regulatory gray area. RWA projects in the Dubai market, especially tokenization of traditional assets such as real estate, supply chain finance, notes, and bonds, will also have clearer compliance basis and regulatory guidelines.

At the same time, DFSA's settings of sandbox application objects provide actual operation space for different types of RWA project parties. According to DFSA guidelines, the entities that can currently apply for participation in the sandbox include:

issues, trades, holds or settles tokenized investments (such as stocks, bonds, Islamic bonds and collective investment fund units).Company;

Financial institutions that have a DFSA license and plan to expand their tokenization business;

Company team with a deep understanding of applicable legal and regulatory frameworks.

In other words, whether it is a traditional financial institution that already has a certain financial background and hopes to expand its tokenization business, or a startup project that is in the exploration period of model and focuses on the digitalization of RWA assets, they can apply for entry with the help of the DFSA sandbox mechanism to obtain low-threshold compliance trial opportunities.

Especially for small and medium-sized RWA entrepreneurial teams, the phased regulatory exemptions and support provided in the sandbox can just help the team verify the business model at a lower cost in the early stage, while clarifying the future path to compliance and license.

More important to note is that DFSA has launched an innovative testing licensing mechanism called ITL Tokenisation Cohort, allowing RWA project parties to enter the market in advance without fully meeting all capital requirements and risk control obligations, realize low-threshold testing of products and models in a real environment, and then transition to the licensed stage.

The overall process is divided into three stages:

1. The stage of expressing intention

The project party must submit an intent form to indicate the plan to carry out the Tokenisation business at DIFC (Dubai International Financial Center). DFSA will conduct preliminary assessments based on background, governance, technical plans, etc.

2. ITL testing phase

After passing the initial evaluation, the project can enjoy exemptions from some capital, prudent obligations, and reporting requirements within the 6-12-month window period, access the real market environment at a low cost, and test the business model. However, DFSA also clearly pointed out that participating projects still need to undergo continuous supervision, and the project party needs to ensure that key risk points such as information disclosure, DLT system security, and custody arrangements meet regulatory requirements.

3. After the test period is over, the project needs to choose to apply for thePlease hold a complete DFSA license, or clear the business according to the exit mechanism. DFSA will strictly implement market exit for projects that fail to meet the "graduation" standards.

It should be noted that this sandbox only serves the tokenization of traditional financial assets and real-world assets. Therefore, other pure cryptocurrency projects (Crypto Tokens) and fiat stablecoins (Fiat Crypto Tokens) are not applicable.

At present, globally, there is a clear regulatory framework for RWA or tokenized assets, mainly focusing on the two markets of Dubai and Hong Kong. Although both of them actively promote the clarity of RWA supervision, there are significant differences in specific implementation.

It can be seen that although Dubai DFSA and Hong Kong HKMA are actively promoting the clarification of tokenization supervision, the mechanisms between the two places show significant differences in the participation threshold and applicable subjects.

For RWA entrepreneurs, DFSA's ITL sandbox mechanism has several practical advantages that deserve special attention:

1. Suitable for start-ups and small and medium-sized teams, flexible for independent applications

Hong Kong Ensemble sandbox, the overall design focuses on the participation of the traditional financial system, and the leading institutions of licensed institutions such as banks and securities companies. Start-up project parties often need to rely on partners to participate, and the application chain is relatively complex.

In contrast, DFSA's ITL mechanism allows project parties to apply directly as independent entities without relying on existing financial institutions. For RWA projects with limited resources and in the period of model exploration, they have higher autonomy and operational flexibility.

2. Phase-of-stage exemptions during the test period to reduce compliance test costs

DFSA clearly provides a 6-12-month test window, and implements phased exemptions for capital requirements and prudent risk control obligations during the period, especially allowing projects to quickly verify business models in a real market environment, while significantly reducing early test costs and operational burden. Therefore, the DFSA ITL mechanism is calculated that under the current global diversified regulatory system, there are few independent application channels, phased exemptions, and full-chain links for RWA entrepreneurship projects.Practical cases of paths.

The overall compliance threshold for Hong Kong's path is relatively high, especially the SFC licensed system has strict requirements on capital, governance structure, etc., which will challenge the startup team in the short term.

3. The regulatory framework is clear, and RWA assets are officially in charge. DFSA has included Security Tokens and Derivative Tokens in the current financial regulatory system, eliminating the gaps and legal risks faced by tokenized assets. The project party only needs to follow DFSA's existing financial product regulatory framework to conduct development, trading and other businesses legally and in compliance with regulations, which is highly predictable.

In comparison, Hong Kong Ensemble Sandbox is still in the pilot stage of collaboration between banks and financial institutions, and its scope of application is more towards the financial infrastructure level. The direct regulatory channel applicable to Web3 project parties, especially entrepreneurial project parties, still needs to be improved.

It can be seen that DFSA's sandbox launch is not only a simple compliance innovation, but also reflects Dubai's intention to strive for the first-mover advantage of the RWA track as a regional financial technology center in the Middle East.

Whether choosing Hong Kong or Dubai, the key to the RWA project is always how to find the most suitable compliance path for the project at this stage based on its own stage, resources and strategic planning.

The tokenized regulatory sandbox launched by DFSA is providing a realistic opportunity with moderate thresholds, clear regulatory framework and controllable costs for RWA projects in the exploration period and hope to quickly verify the model.

But it is worth noting that this window is not open for a long time. The project party must not only grasp the time, but also complete compliance preparations in advance in order to truly take the lead in implementing it first.

In this regard, lawyer Mankun suggested that the following points should be paid attention to:

Complete DIFC registration and legal structure design as soon as possible. Only by establishing a registered entity in DIFC can you enter the DFSA regulatory system. It is recommended to plan equity structure and tax arrangements in advance to avoid missing the application window due to insufficient compliance preparation.

Prepare technical solutions and risk control materials in advance. DFSA has detailed requirements for DLT system design, hosting mechanism, and compliance process. It is recommended to hire a compliance team to assist in preparing relevant materials to ensure that they are approved in one fell swoop during the ITL application stage.

Plan the license path after ITL graduation. The sandbox period is only a phased convenience. The ultimate goal should be to obtain a formal DFSA license in full. It is recommended to prepare long-term plans such as capital replenishment and governance documents to avoid interruptions in operation after the sandbox period ends.

It can be predicted that the DFSA sandbox will attract the influx of global projects, but the teams that can truly be implemented first and complete graduation and become formal are still those who plan ahead of schedule in governance, risk control, and compliance preparation.

The regulatory window has already opened, and the market often does not have much time left for actors.

Next step, are you ready?