The Dubai Virtual Assets Regulatory Authority (VARA) has finally issued its highly anticipated Virtual Assets and Related Activities Regulations of 2023. This set of new rules is closely aligned with Article 5 of the Dubai’s Virtual Assets Law, a regulation that was designed, among others, to promote Dubai as a regional and international hub for virtual assets and related services.
VARA, which is affiliated to the Dubai World Trade Centre Authority (DWTCA), is the competent local entity in charge of regulating, supervising, and overseeing virtual assets and its related activities in all zones across the Emirate of Dubai, including Special Development and Free Zones, but excluding the Dubai International Financial Centre (DIFC).
The regulated activities and services that fall within the scope of VARA include:
- Advisory
- Broker and Dealer
- Custody
- Exchange
- Lending and Borrowing
- Payments and Remittances
- Virtual Asset Management and Investment
For licensing purposes, each of these activities must be accompanied by a respective rulebook and company-wide manuals covering Compliance & Risk Management, Technology and Information, Market Conduct, and general Company Conduct.
This new regulation is heavily influenced by the following fundamental principles for the effective regulation of virtual assets and virtual activities:
- Market Integrity and Stability
- Consumer Protection
- Technology Neutrality and Supportive of Innovation
- Regulatory Resilience
- Regulatory Efficiency and Proportionality
Taking into consideration the spirit of the regulation, VARA is expected to be friendly to new applicants, while retaining and applying a high level of threshold conditions to ensure the law’s fundamental principles are applied effectively.
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