VARA is committed to ensuring the public is kept informed about the latest regulatory developments applicable in Dubai and fully aware of relevant risks in the emerging virtual asset space. Our FAQs are a helpful resource, but if you have a specific question not covered in the FAQs, please contact the VARA team directly.
The VARA Virtual Assets and Related Activities Regulations 2023 is a bespoke Virtual Assets regulatory regime, which aims to provide VASPs with clear, comprehensive rules for offering Virtual Asset services and activities to the market.
Please refer to the register of licensed firms published on VARA’s website.
VARA’s licensing framework has been established to regulate and supervise Virtual Asset Service Providers [VASP] in furtherance of VARA’s aim to foster consumer protection and prevent illicit finance. This framework consists of compulsory rulebooks and the activity-based rulebooks set out below.
1. Various Licence categories are available based on the activity that the VASP intends to offer the market, noting that each activity is ‘discrete’ and hence must be applied for explicitly, based on the requirements for each as stipulated by VARA:
2. Additionally, issuers of Virtual Assets will have to obtain approval from VARA under the VA Issuance Rulebook.
3. Key Notes:
No VA activity is ‘exempt’ from regulatory supervision; as such any VA service or activity requires a VARA licence, registration or No Objection Certificate [NOC].
Applications for a Virtual Asset Service Provider Licence are now being accepted, and you can initiate the process by contacting the DET [Mainland], or any FZA [Free Zone] in the emirate of Dubai [excluding the Dubai International Financial Centre]. VARA will be available to provide clarifications on the licensing process and licensed activities. Note that submission of applications or any documents must be made through the relevant commercial licensor [either DET or FZA].
Any entity wishing to carry out regulated Virtual Asset activities and services in or from the emirate of Dubai must apply for a Virtual Asset Service Provider Licence.
Please refer to the Licence Applications page on our website.
VASPs can provide services to retail customers upon approval of a Virtual Asset Service Provider Licence. At VARA’s discretion, certain VASPs may be approved to only provide services to Qualified Investors and institutional clients.
There are no nationality restrictions on persons submitting a VARA license application. Note that the application has to be made on behalf of a legal entity established with DET or a Free Zone [excluding DIFC].
A Limited Liability Company [LLC] or FZ CO is preferable for this sector. Applications from sole proprietorships will not be accepted by VARA.
Please refer to the Licence Applications page on our website.
VARA requires VASPs to have a physical presence in Dubai to conduct VA activities from Dubai.
The VA activities set out below require a private office to conduct business:
There is no minimum size/space requirement from VARA. VASPs should check space requirements with their respective commercial licensors [DET/FZ] based on their staffing needs.
Details of VARA’s Licensing and Supervision fees can be found in Schedule 2 of the Virtual Assets and Related Activities Regulations 2023.
Details of VARA’s Capital and Prudential Requirements can be found in Part VI of the Company Rulebook.
Entities will be required to hold a VARA Licence or Acknowledgment of Application Notice [AAN] if they carry out any of the following VA activities, namely:
AAN’s are issued to firms carrying on VA activities in the emirate of Dubai [excluding DIFC] prior to 7 February 2023.
Entities that issue Virtual Assets [for example, new token releases, or minting of NFTs] must seek approval from VARA regarding the issuance of the Virtual Asset as described in the VA Issuance Rulebook. Such entities should also determine if any of their activities relating to the Virtual Assets fall within the categories of VA Activities described above.
No VA activity is ‘exempt’ from regulatory supervision; as such any VA service or activity requires a VARA license, registration, or No Objection Certificate [NOC].
DLT [Distributed Ledger Technology] service providers that are carrying out any VA activity falling within the categories described above require a VARA Licence; DLT service providers that do not currently offer any VA activities may voluntarily register themselves with VARA, should they so choose – to have the option of catering for VA activities in the future.
Distributed Ledger Technology [DLT] Service Providers are required to hold a VARA Licence if they are providing or carrying out any of the below-mentioned VA activities:
Entities that possess NFT Marketplace Commercial Licences with Free Zones must obtain a VA Exchange Licence and/or a VA Broker-Dealer Licence from VARA, depending on the exact activities of the marketplace.
You may apply for an activity amendment through the Department of Economy and Tourism [Mainland], or any Free Zone except DIFC.
There is a two-stage process.
VASPs may be rejected if they are unable to fulfill VARA licensing requirements.
Please refer to the Licence Applications page on our website.
VASPs that receive an AAN must complete the full VA license application and ensure submission by 31.August.2023.
Please refer to the Licence Applications page on our website.
Renewal of Commercial licences for existing legacy firms that have received an AAN [with no change in the VA activity applied for] does not need VARA’s approval.
Amendment of commercial licences [change of name/ UBO/ address] of existing legacy VASPs requires VARA’s approval. VARA will issue an amended AAN to the VASP, as required.
Change of a VA Activity requires VARA review. A new IDQ will need to be submitted.
Withdrawal of Commercial licenses requires DET or the Free Zone Authority to notify VARA.
VARA will withdraw the AAN for any entity that cannot fulfill Virtual Asset Service Provider Licence requirements.
VARA can withdraw the AAN in certain scenarios including but not limited to:
Failure to comply with VARA’s Marketing Regulations and Guidelines may result in substantial punitive measures including material fines/penalties and potential entity closure.
Failure to comply with VARA’s Marketing Regulations and Guidelines may result in substantial punitive measures including material fines/penalties and potential entity closure.
VASPs that are not licensed by VARA may still conduct marketing activities in or from Dubai provided the relevant marketing permit is obtained. Note that unlicensed VASPs are not permitted to onboard Dubai residents as customers and any marketing material must have disclosures clearly indicating that such products or services are not available for residents of Dubai.
If you are unable to find the answers you are looking for, please contact VARA directly.