GLD FZE is an Entity incorporated in a free zone within the Emirate. GLD FZE wants to issue a Virtual Asset called GLD1 which maintains a stable value with reference to the price of one (1) ounce of gold. Purchasers of GLD1 can mint GLD1 by sending GLD FZE the current value of one (1) ounce of gold and in return will receive one (1) GLD1. Owners of GLD1 can also redeem the current value of one (1) ounce of gold by sending GLD1 back to GLD FZE.
 

Key considerations: Issuing GLD1 would be categorised as a Category 1 VA Issuance under the VA Issuance Rulebook and, as such, GLD FZE would require a Category 1 VA Issuance Licence from VARA prior to issuing GLD1. The reason for this is that gold constitutes an RWA under VARA's definition as it is a ‘physical and/or tangible asset’ and GLD1 purports to maintain a stable value or reference to gold (i.e. an RWA).
 

As part of GLD FZE's application to VARA for a Category 1 VA Issuance Licence, GLD FZE will need to clearly describe in the Whitepaper how GLD1 maintains a stable value with reference to one (1) ounce of gold, as planned. This will require GLD FZE to maintain sufficient and acceptable Reserve Assets such that the risks associated with the rights and/or value that GLD1 grants, or purports to grant, owners of GLD1 are secured. Given the nature of GLD1 this will likely require GLD FZE to hold Reserve Assets in gold and/or regulated gold derivative contracts, equal to or exceeding the circulating supply of GLD1, at all times.
 

As owners of GLD1 have a right of redemption, GLD FZE will need to manage liquidity risks associated with the Reserve Assets. GLD FZE will need to offer owners of GLD1 the right to redeem their GLD1 for its value in Dirhams (AED) as well as any other options that may be offered.