Key Considerations While Applying for a VARA License Dubai

Ever since Dubai’s Virtual Assets Regulatory Authority (VARA) was established in 2022, the Emirate has taken over cryptocurrency and other virtual assets by storm. VARA, the world's first independent regulator for virtual assets, acts as a transparent and trustworthy guiding authority for the burgeoning world of virtual assets. VARA intends to expand its purpose globally by developing an easily replicable framework for regulating the business.

Dubai's Virtual Asset Regulatory Authority (VARA) has released the Virtual Assets and Related Activities Regulations 2023. The Regulations provide a comprehensive Virtual Asset (VA) Framework based on concepts of economic sustainability and cross-border financial security. The UAE is dedicated to responsibly enabling these drivers, upgrading its monitoring and regulatory approach, and tackling global threats of money laundering (ML) and terrorist financing (TF) posed by the possible exploitation of emerging technology. The VA Framework is fundamentally designed to provide regulatory certainty, giving the market greater clarity about the expected degree of operator accountability. It also requires licensed firms in the Emirate to follow gold-standard risk assurance and anti-money laundering (AML) requirements.

VARA License in Dubai is considered to be one of the most sought-after licenses in the world for cryptocurrency businesses to run their operations in the United Arab Emirates. VARA identified eight separate Virtual Asset (VA) activities that define the regulatory boundary. The operations are flexible and adaptable to the sector's evolving needs. The industry is advised to see this list of activities as a firm basis that allows for innovation, rather than a fixed registry. To provide VA services in Dubai, VASPs must first get a VARA License Dubai.

VARA License Dubai: Licensed Activities

-        Advisory Services

-        Broker-Dealer Services

-        Custody Services

-        Exchange Services

-        Lending and Borrowing Services

-        Management and Investment Services

-        Transfer and Settlements Services

-        VA Issuance Category 1

A VASP can request to be licensed for several activities and group them under a single umbrella license, except certain Custody Services. Custody Services are subject to special standards for activity separation and/or demonstrating independence of governance or arms-length affiliation with another.

The sole regulated activity on the current list of eight is Virtual Asset Custody Services, which must be kept apart from other Virtual Asset Services licensing categories. In this case, a VA Custodian must be established as a unique legal organization with its licensing.

Licensed VASPs are not permitted to engage in proprietary trading or trade their Group's portfolio of assets under the regulated activity(ies) license. A separate firm must be established for proprietary trading.

Key Considerations Before Applying for a VARA License Dubai

When applying for a Virtual Assets Regulatory Authority (VARA) license in Dubai, many crucial factors might help guarantee a smooth and successful experience. Here are some crucial variables to consider:

- Regulatory Understanding: Learn about the regulatory framework that governs virtual assets in Dubai, including the regulations established by VARA. Understand the eligibility criteria, paperwork requirements, and compliance duties for VARA licenses.

- Business strategy: Define your business strategy and the extent of virtual asset operations you propose to carry out. Your business strategy should clearly describe your intended services, target market, income sources, and compliance methods. 

- Legal form: Choose the right legal form for your virtual asset firm, whether it's a limited liability corporation (LLC), partnership, or free zone entity. When deciding on a legal structure, consider ownership, responsibility, and tax issues. 

-  Financial viability: Ensure that your company displays financial viability and stability to fulfill the regulatory criteria. Prepare financial documents, forecasts, and proof of sufficient capitalization to accompany your VARA license application.

-Compliance: Implement strong compliance procedures to comply with anti-money laundering (AML) and know-your-customer (KYC) rules. Create detailed rules and processes for client due diligence, transaction monitoring, and reporting on questionable activity.

- Technology Infrastructure: Invest in dependable technology infrastructure, such as secure trading platforms, risk management systems, and cybersecurity protocols. Ensure that your technological solutions meet regulatory standards and provide proper protection for customer assets and data.

- Professional Advice: Consult with legal, financial, and regulatory specialists who have experience with the virtual asset business and VARA licensing applications. They may offer significant insights, help with regulatory compliance, and efficiently manage the application process.

- Engagement with Authorities: Maintain open communication with regulatory authorities throughout the application process, and respond to any questions or concerns as soon as possible. Please provide correct and complete information so that your VARA license application may be reviewed and approved. 

- Operational Preparedness: Ensure that your company is operationally ready to begin virtual asset operations once you have received the VARA license. Create internal controls, risk management processes, and contingency plans to successfully manage operational risks.

- Ongoing Compliance: Commit to meeting regulatory obligations on an ongoing basis and staying up to speed on new regulatory developments in the virtual asset industry. Implement systems for ongoing monitoring, assessment, and improvement of compliance measures to ensure regulatory compliance.


By carefully evaluating these critical aspects and meticulously drafting your VARA license application, you may increase your chances of receiving regulatory clearance for your virtual asset business in Dubai.