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 Category 2 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 VARA Virtual Asset Service Provider Licence are now being accepted, and you can initiate the process by contacting the DET [Mainland], or any FZ [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 FZ].
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 seeking to carry out Category 1 Virtual Asset (VA) issuance must obtain a VARA Licence and should therefore follow the usual VARA Licensing Process.
Entities seeking to obtain a license from VARA to carry out Fiat-Referenced Virtual Assets (FRVA) issuance must adhere to all compulsory rulebooks [Company Rulebook, Compliance and Risk Management Rulebook, VARA Technology and Information Rulebook, and Market Conduct Rulebook]. VASPs must also adhere FRVA Rules in ANNEX 1: FIAT-REFERENCED VIRTUAL ASSETS ISSUANCE RULES of the VA Issuance Rulebook.
No. Entities in the Emirate seeking to carry out a Category 2 VA issuance must obtain prior approval from VARA.
• Entities must fill an VARA Issuance Approval Form [Category-2] form and must provide information including the purpose and use of the VA, the nature of the business and activities for which the VA will be used.
• Entities should provide a Whitepaper, and full details of the issuer, among other requirements. VARA may request further information as it deems necessary to inform any decisions.
• Entities must exhibit compliance with AML CFT requirements.
Entities must ensure compliance with technical, information security, data privacy, and cryptographic controls. Anonymity enhanced tokens are prohibited.
• A Re-submission to the White Paper has to be conducted.
• VARA will need to review, assess and approve the material changes and the impact on the VA issued.
A fee will need to be paid for the white paper modification.
Entities will be required to hold a VARA Licence or Legacy Operating Permit [LoP] if they carry out any of the following VA activities, namely:
Entities that issue Virtual Assets Category 2 [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 Department of Economy and Tourism [Mainland], or any Free Zone except DIFC.
There is a two-stage process.
• Stage 1 – Initial Disclosure Questionnaire [IDQ] – VASPs are required to fill an IDQ with DET or a FZ, which will be screened by the commercial licensing bodies, then transferred to VARA for assessment.
a. Based on the assessment, VASPs may be rejected or additional information may be requested
b. Eligible VASP’s will receive an Application Acknowledgement Notice [AAN].
c. The VASP is then required to satisfy detailed licencing requirements as set out by VARA based on the VA activity the VASP proposes to carry out.
• Stage 2 – Apply for a Legacy Operating Permit [LoP] [The permit allows the VASPs to transition to the full VA regulatory regime in a gradual manner [12 months] ]
• Stage 3. Upon completion of such requirements, the VASP will or will not be issued an Virtual Asset Service Provider Licence .
VASPs may be rejected if they are unable to fulfil VARA licensing requirements.
Please refer to the Licence Applications page on our website [link].
• Supporting the Dubai VA ecosystem is one of the utmost priorities for VARA to ensure economic stability, growth and financial solvency.
• VARA has welcomed all Dubai VA Legacy Operators to apply for Dubai Legacy Programme that allows them to transition to VARA’s regulatory regime.
• Various trainings and awareness programmes continue to run in collaboration with Department of Economy and Tourism, and the Free Zone Council.
• VARA has requested all VA operators in Dubai to register with VARA by completing an Initial Disclosure Questionnaire [IDQ].
• VASP’s who have received an Application Acknowledgment Notice [AAN], then move the Legacy Operating Permit [LoP].
• The permit allows the VASPs to transition to the full VA regulatory regime in a gradual manner and provides relief in terms of discounted licencing fees and capital requirements .
• The Legacy Operating Permit is valid for 12 months, during the period where the VASPs gradually develop and comply with the full licensing and supervision requirements.
• VASPS who have missed the deadline to apply for an [AAN], should immediately apply directly to receive the Legacy Operating Permit [LoP] to avoid any disciplinary actions.
• The Legacy Operating Permit [LoP] allows the VASPs to transition to the full VA regulatory regime in a gradual manner and provides relief in terms of discounted licencing fees and capital requirementsYou may apply through Department of Economy and Tourism, or your preferred Free Zone as your commercial licensor.
• Yes, a Legacy Operating Permit is only valid for 12 months. If you are unable to comply with the full VASP licensing requirements within 12 months. You will be required d to cease your VA operations and winddown.
Those who hold a LoP are required to submit for a full VASP license application 90 days prior to the expiry of the LoP.
No. The legacy Operating Permit is non-renewable and is only valid for 12 months.
Renewal of Commercial licences for existing legacy firms that have received an AAN can be only done if they have applied for the Legacy Operating Permit [LoP}.
Those who have already applied for an LoP [with no change in the VA activity applied for] do 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 LoP 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/ LoP for any entity that cannot fulfil Virtual Asset Service Provider Licence requirements.
VARA can withdraw the AAN/LoP in certain scenarios including but not limited to:
1. All event organisers are required to apply for events permits in Dubai [excluding DIFC] through the e-Permit system of the Department of Economy and Tourism.
2. You may apply for a VA event permit through the e-Permit system, by selecting the category [VA event].
3. You will be required to confirm your adherence to VARA’s Marketing Regulations and Guidelines [Links below]
4. https://www.vara.ae/media/Administrative-Order-01-%20Regulatory-Guidelines-on-Marketing-Advertising-and-Promotions-related-to-Virtual-Assets-27Jan2023.pdf
5. https://www.vara.ae/media/Administrative-Order-02-Penalties-for-Non-Compliance-27Jan2023.pdf
6. You should ensure that all exhibitors and sponsors are aware of VARA’s Marketing Regulations and Guidelines.
7. VARA reminds all concerned parties to confirm their adherence to the VARA’s Marketing Regulations and Guidelines on the e-Permit system of the Dubai Government.
8. Failure to comply with VARA’s Marketing Regulations and Guidelines may result in substantial punitive measures including material fines/penalties and potential entity closure.
1. For such advertising you are required to apply through the central government advertising system managed by Dubai Municipality.
2. You may apply for a permit by selecting the category [Virtual Asset Activity].
3. You will be required to confirm your adherence to VARA’s Marketing Regulations and Guidelines [inks below].
4. https://www.vara.ae/media/Administrative-Order-01-%20Regulatory-Guidelines-on-Marketing-Advertising-and-Promotions-related-to-Virtual-Assets-27Jan2023.pdf
5. https://www.vara.ae/media/Administrative-Order-02-Penalties-for-Non-Compliance-27Jan2023.pdf
6. VARA reminds all concerned parties to confirm their adherence to the VARA’s Marketing Regulations and Guidelines on the content approval system of the Dubai Government.
7. 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.