Country overview

Critical features of VARA include (without limitation):

VARA will have legal status and financial and administrative autonomy, with an independent and juridical capacity to protect and regulate the stakeholders in virtual asset services. VARA will be affiliated with the Dubai World Trade Centre Authority.

VARA regulates, supervises, and oversees the issuance, offering, and relevant disclosure processes of virtual assets and NFTs.

VARA will cooperate with other federal agencies, including the UAE Central Bank, issue a code of ethics, general policy, and strategic plans, and enforce VAL. VARA will not, however, regulate services related to virtual assets on a federal level. An entity that breaches VAL may be subject to specific penalties and fines, including withdrawal of VARA’s authorization for six months.

Any natural person or legal entity offering virtual asset services can only do so if it is (1) granted a license from VARA, (2) operating in the Emirate of Dubai, and (3) has a trade license from the relevant commercial authority in the Emirate of Dubai. VARA’s mandate includes monitoring trading activities in virtual asset services to prevent price manipulation and establish high personal data protection standards.

VARA is expected to issue implementing decisions on the implementation of VAL, including a description of relevant activities, exempted virtual assets, procedures for licensing and associated charges, virtual asset custodians, digital wallets, and tokenization and trading.

The decision regulating virtual asset platform operators contains nine articles, including Article 3, which prohibits the trading of virtual assets in the UAE unless they are admitted to the official list of virtual assets of the virtual asset platform operators licensed by the SCA and/or the competent authority.

VARA’s regime is founded on the principles of enforcing:

Responsible market participation backed by a future-proofed and responsive regulatory framework that remains technology agnostic and collectively deliver

(a) socio-economic stability; (b) robust consumer protection; and (c) jurisdictional resilience.

The 4-stage licensing process allows applicants to progress through a tiered approval gateway starting with (

1) Provisional permit; graduating to a 2-step

[(2) Preparatory + (3) Operating] Minimum Viable Product (MVP) license;

(4) Full Market Product (FMP) license will only take effect after the regulations have been tested within the regime.

Every Virtual Asset Service Provider [VASP] must go through all four stages in this current environment. VARA expects to evaluate, observe, and only then authorize suitably qualified entities to undertake any market servicing activities under its licensing regime.

So far, the VARA licenses issued have only been either at Stage-Gate (1) Provisional or (2) MVP-Preparatory – to enable VASPs to fulfill all pre-conditions, and undertake readiness steps, e.g., establish offices, onboard employees with work visas, secure domestic bank account, etc. before being in a position to undertake any market operations. As such, no VARA licensee has, to date, been awarded an MVP-Operating permit to provide regulated services or activities to their specifically authorized market segment(s) in the Emirate. Any information or representation to the contrary is inaccurate and misleading.

Each VASP awarded an MVP license must comply with the [MVP Licence Conditions Document] issued by VARA and strictly adhere to the licensing conditions outlined in the appended letter. One of the MVP conditions is that VA activities during this phase may only be provided to qualified and/or institutional investor segments. Mass retail consumers are strictly prohibited until the Stage-Gate (4) FMP license approval has been secured. [Virtual Assets and Related Activities Regulations 2023] will stipulate relevant licensing conditions and requirements. VARA’s complete market regulations, when published, will specifically focus on securely enabling borderless economic opportunity across the global VA industry, protecting investors and market participants, backed by active enforcement of all regulatory requirements beyond security and cross-border compliance, including those of custody and segregation of client money; prudential requirements (viz. insurance and liquidity cover); FATF compliance, market manipulation and/or abuse prevention.

VARA Official Site (9)

Abu Dhabi Global Markets is a regulated financial free zone of the UAE capital, Abu Dhabi. It established crypto asset activities regulations back in 2018. At the moment, it offers a whole range of business activities related to crypto assets:

Crypto asset custodian

Crypto exchange license

Buying, selling, and exercising any right in accepted crypto assets

Managing other people’s crypto assets

Providing custody of crypto assets and making arrangements with a view to another person

Marketing of crypto assets

DMCC is not a regulated financial-free zone, but it is still a pioneer in providing crypto licenses in Dubai. Currently, DMCC offers the following types of crypto-related business setups:

Distributed ledger technology services

Proprietary trading in crypto commodities

NFTs E-marketplace provider

Metaverse services provider

DWTC has announced that it will be one of the first free zones issuing crypto-related licenses under the supervision of the Securities and Commodities Authority. The activities being offered are:

Proprietary trading in crypto-commodities

Distributed ledger technology services

Currently, DAFZA offers one type of crypto license, which is:

Proprietary trading in crypto-commodities