Introduction
The Dubai Virtual Assets Regulatory Authority (VARA) was established under Law No. (4) of 2022 Regulating Virtual Assets in the Emirate of Dubai ("Dubai VA Law") to oversee virtual assets (VAs) and virtual asset service providers (VASPs). VARA operates under the Dubai World Trade Centre Authority (DWTCA) and regulates VA activities across Dubai, excluding the Dubai International Financial Centre.
Key Objectives of VARA:
- Promote Dubai as a global hub for virtual assets.
- Enhance investor awareness and innovation in VA products.
- Attract investments and businesses to Dubai’s digital economy.
- Protect investors and curb illicit practices.
- Develop robust regulatory standards for VA platforms.
👉 Learn more about VARA’s regulatory framework
Laws and Regulations
1. Dubai VA Law (No. 4 of 2022)
- Primary legislation governing VAs and VASPs in Dubai.
- Grants VARA exclusive regulatory authority.
2. Cabinet Resolutions
- Resolution No. 111/2022: Regulation of VAs and service providers.
- Resolution No. 112/2022: Delegation of regulatory competencies to VARA.
3. Virtual Assets and Related Activities Regulations (2023)
- Establishes rules for VA issuance, trading, and custody.
- Prohibits anonymity-enhanced cryptocurrencies.
Core Regulatory Principles
Market Integrity
- Ensure fair, transparent, and stable VA markets.
- FATF-compliant anti-money laundering (AML) measures.
Consumer Protection
- Mandate clear risk disclosures for investors.
- Prevent misleading marketing practices.
Technology Neutrality
- Support innovation without favoring specific protocols.
Regulatory Efficiency
- Balance oversight with minimal operational burden.
Licensing Requirements
VA Activities Requiring VARA License
| Activity | Description |
|---------------------------|--------------------------------------------|
| Advisory Services | Personalized VA investment recommendations. |
| Broker-Dealer Services| Facilitating VA trades and market-making. |
| Exchange Services | VA-to-fiat or VA-to-VA trading platforms. |
| Custody Services | Safekeeping client VAs. |
👉 Explore licensing fees and process
Compliance and Enforcement
Anti-Money Laundering (AML)
- VASPs must comply with UAE Federal AML-CFT laws.
- Report suspicious transactions to the UAE Financial Intelligence Unit (FIU).
Market Offenses
- Insider Trading: Using non-public information for VA trades.
- Market Manipulation: Artificially inflating/deflating VA prices.
Penalties
- Fines up to AED 50M for severe violations.
- License suspension/revocation for non-compliance.
Marketing Regulations (2024)
Key Rules
- All VA ads must include risk warnings.
- Prohibit "guaranteed returns" claims.
- Airdrops and influencer promotions require VARA approval.
Prohibited: Marketing of anonymity-enhanced cryptocurrencies.
FAQs
1. Who needs a VARA license?
Any entity offering VA services (e.g., exchanges, custodians) in Dubai.
2. What are the penalties for non-compliance?
Fines range from AED 20M–50M, depending on violation severity.
3. How does VARA protect investors?
- Enforces transparency in VA trading.
- Mandates AML checks for VASPs.
Conclusion
VARA’s framework ensures Dubai’s VA sector operates securely and innovatively. Entities must adhere to licensing, AML, and marketing rules to avoid penalties.
For the latest updates, refer to VARA’s official portal.