The Virtual Assets Regulatory Authority (VARA), established in March 2022 under Dubai’s Law No. 4 of 2022, is a ground breaking initiative designed to oversee and regulate virtual assets and related activities within the Emirate of Dubai. As the world’s first specialized regulator for virtual assets, VARA is at the forefront of shaping Dubai into a global hub for innovation and excellence in the blockchain and cryptocurrency sectors.
1.Purpose and Objectives
VARA’s primary mandate is to create a secure and transparent regulatory environment for virtual asset operations while fostering innovation. By doing so, it aims to:
- Safeguard investors and market participants from risks associated with virtual assets.
- Establish trust and integrity in the digital economy.
- Promote the adoption of blockchain and virtual asset technologies in a sustainable and compliant manner.
2. Operational Scope
VARA operates across:
- Mainland Dubai
- Free zones, excluding the Dubai International Financial Centre (DIFC), which is governed by the Dubai Financial Services Authority (DFSA).
Its regulatory framework governs Virtual Asset Service Providers (“VASP”) involved in a range of activities, such as:
- Advisory Services: Providing insights and recommendations for virtual asset investments.
- Broker-Dealer Services: Facilitating the trade of virtual assets between buyers and sellers.
- Custody Services: Safeguarding digital assets on behalf of clients.
- Exchange Services: Operating platforms for the exchange or trading of virtual assets.
- Lending and Borrowing Services: Enabling the lending and borrowing of virtual assets.
- Portfolio Management and Investment Services: Managing investments in virtual assets.
- Transfer and Settlement Services: Facilitating the transfer and settlement of virtual asset transactions.
3. Licensing Framework
VARA enforces a meticulous licensing process to ensure compliance, security, and adherence to best practices in the virtual asset industry. The licensing procedure includes:
- Approval to Incorporate (ATI): Entities must establish a legal presence in Dubai through the Dubai Economy & Tourism (DET) department or a designated free zone.
- VASP License Application: After obtaining ATI, entities can apply for a license to operate virtual asset services within Dubai.
4. Vision and Impact
VARA’s vision extends beyond regulation—it strives to position Dubai as a global leader in the digital economy. By promoting the responsible growth of the virtual asset ecosystem, VARA aims to:
- Encourage innovation while mitigating risks.
- Attract leading global players to establish their presence in Dubai.
- Ensure financial stability and investor confidence in the digital space.
Through its forward-looking policies and frameworks, VARA underscores Dubai’s commitment to becoming a world leader in virtual asset adoption and blockchain-driven economic transformation.