What Is the Difference Between a VARA License and a VASP License in Dubai?

Businesses looking to establish a crypto company in Dubai often use the terms "VARA license" and "VASP license" interchangeably. Although the two terms are closely connected, they do not mean exactly the same thing.

Finjuris

Sep 14, 2026 - 10:47

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What Is the Difference Between a VARA License and a VASP License in Dubai?

Businesses looking to establish a crypto company in Dubai often use the terms "VARA license" and "VASP license" interchangeably.

Although the two terms are closely connected, they do not mean exactly the same thing.

Understanding the distinction is important for founders, investors, and virtual asset businesses planning to operate legally in Dubai.

This article explains the difference between a VARA license and a VASP license, how they relate to each other, and why the distinction matters when applying for regulatory approval.

What Is VARA?

Dubai has a special regulatory authority called the Virtual Assets Regulatory Authority, or VARA for short. This regulator oversees keeping an eye on and regulating businesses that deal with virtual assets, like cryptocurrencies, in Dubai. They make sure these businesses are following the rules and give them licenses to operate. But there's a special case - the Dubai International Financial Centre, or DIFC, has its own set of rules and isn't covered by VARA.

In simple terms:

VARA is the regulator.
It issues licenses.
It supervises compliance.
It enforces the applicable regulatory framework.

Think of VARA as similar to how other financial regulators license and supervise financial institutions.

What Is a VASP?

A company that provides virtual asset services is what we're talking about here, not the people who make the rules.

A VASP is a company or organization that has permission to do certain activities related to virtual assets that are regulated by law.

Examples include companies providing:

Virtual Asset Exchange Services
Broker-Dealer Services
Custody Services
Advisory Services
Lending and Borrowing Services
Management and Investment Services
Transfer and Settlement Services

Category 1 Virtual Asset Issuance Services

Companies that do these controlled tasks need to get the right permit before they start working.

So, What Is a VASP License?

A VASP license is the regulatory authorisation granted by VARA allowing a business to undertake approved virtual asset activities.

This is where many businesses become confused.

People often say:

"We need a VARA license."

Others say:

"We need a VASP license."

In real-life situations, they basically mean the same thing when it comes to getting approval from the right authorities.

The difference lies in perspective.

A VARA license is basically a permit given by the people in charge, also known as the regulator.
A VASP license refers to the license held by the Virtual Asset Service Provider.

The language might be different, but basically, they're talking about the same system that VARA oversees.

Why Does the Distinction Matter?

Although the terms are frequently used interchangeably, understanding the distinction helps businesses communicate more accurately with regulators, legal advisors, investors, and banking partners.

For example:

Instead of saying:

"VARA is a VASP."

The correct description is:

VARA is in charge of giving licenses to and keeping an eye on Virtual Asset Service Providers, or VASPs for short.

Similarly:

Instead of saying:

"Our company is VARA."

The correct statement would be:

Our company is approved and regulated by VARA as a licensed Virtual Asset Service Provider.

Using the right words shows you really get how things work in Dubai when it comes to rules and regulations.

Does Every Crypto Business Need a VASP License?

Not all blockchain or tech companies need a license right away. Some might, but it depends on what they do.

The determining factor is the activities being performed, not whether the business uses blockchain technology.

If a company wants to do business with virtual assets in Dubai, it usually needs to get permission from VARA first. VARA is in charge of overseeing eight different types of virtual asset activities. Companies can apply to do one or more of these activities, depending on what their business does. They need to get the right authorization before they can start operating. This is to make sure everything runs smoothly and according to the rules.

One License Can Cover Multiple Activities

Another common misconception is that businesses need separate licenses for every activity they perform.

In simple terms, VARA lets companies apply for a single license that covers multiple activities, as long as they meet the rules for each one. Some activities, like holding onto customers' assets, have extra requirements to keep things separate and organized.

Common Misconceptions About VARA and VASP Licenses

Because the terms are frequently used together, many businesses misunderstand how Dubai's licensing framework works.

Let's address some of the most common misconceptions.

Myth 1: A VARA License and a VASP License Are Different Licenses

This is probably the biggest misconception.

There’s no distinction between a VARA License and a VASP License - they're essentially the same thing.

A VASP License is issued by VARA.

People simply use different terminology depending on whether they are referring to:

the regulator (VARA), or
the regulated business (VASP).

For example:

✔ "Our company has received a VARA license."

✔ "Our company is a licensed VASP."

Both statements generally describe the same regulatory authorisation.

Myth 2: All Crypto Companies Are Automatically Considered VASPs

No, not really.

It all boils down to what kind of activities the business undertakes rather than just being a blockchain/crypto company.

Take a blockchain software developer, for instance, which provides nothing but technology solutions and has no dealings with regulated virtual asset activities – it may not need a VASP license.

Whereas, any business dealing with exchanges, custody, brokering/dealing, advisory and other regulated virtual asset activities will probably need authorization to start its operations.

Myth 3: The License Gives You the Right to Do Anything

One more myth is that the license gives a business carte blanche to conduct all kinds of virtual asset activities.

Instead, the VARA authorizes certain regulated activities only.

The license defines what types of virtual asset activities the VASP is allowed to conduct, and businesses have to comply not only with the mandatory rulebook VARA, but also with relevant activity rulebooks.

Example of Practical Implementation

Let's say Company A seeks to run a crypto exchange in Dubai.

Then the process will be as follows:

The company will register a proper legal entity in Dubai.
It will submit its application to VARA via the respective commercial licensing authority.
VARA will consider the application and all regulatory documents submitted with it.
In case of approval, VARA will grant VASP License allowing the company to conduct the respective virtual asset activity.
Company A will become a licensed VASP under VARA regulation.

This shows why there is such a close relationship between the terms - the two just mean different things about the same regulatory regime.

Importance of Using the Right Terminology

Using proper terminology shows that one understands Dubai's regulatory environment better.

Also, it will be helpful when dealing with:

regulators;
banking partners;
investors;
institutional clients; and
legal advisors.

For instance, investors will want to know if you are regulated by VARA, whereas banking partners may want to know if you have a VASP License.

There is, in general terms, no material difference between calling something a "VARA license" and calling it a "VASP license."

What matters is that one understands what each means:

VARA is the regulating body in charge of overseeing the Dubai virtual assets industry.
VASP is the company authorized to engage in regulated virtual assets activities.
A VASP license is the authorization granted by VARA for the company to carry out specific activities.

It is not so much a matter of terminology; it is more a matter of making sure that one obtains the right authorization for the right activities.

Frequently Asked Questions

Is VARA license the same as VASP license?

In effect, yes. The VASP license is the one that VARA issues. "VARA license" relates to the regulator which grants the license, while "VASP license" relates to the regulated business holding the license.

What does VASP mean?

VASP means Virtual Asset Service Provider, i.e., a regulated business providing virtual asset services.

Where can a VASP license be obtained in Dubai?

In Dubai, VASP licenses are granted by the Virtual Assets Regulatory Authority (VARA) to the businesses operating regulated virtual asset activities in/from Dubai (except DIFC).

Is there any crypto business that requires a VARA license?

No. Licensing will depend on whether the business is engaged in regulated virtual asset activities within the regulatory perimeter of VARA.

Is a VASP license limited only to one type of activity?

No. A VASP may apply for several types of regulated activities under a single overall VASP license. Certain custody activities require segregation.

Which of the following activities require VARA license?

The activities include advisory, broker-dealer, custody, exchange, lending and borrowing, management and investment, transfer and settlement, and Category 1 virtual asset issuance.

Will the company be able to start its operation post submitting VARA application?

No. The company will not be able to operate its regulated virtual asset activity without obtaining the respective VASP license from VARA. Approval to Incorporate (ATI) is not enough for operations.

Can foreign companies apply for VARA license?

Yes. Companies located outside of the UAE can apply as well if they have created an appropriate legal entity in Dubai and meet VARA requirements for licensing.