Dubai’s VARA Issues Specialised Regulations for Virtual Assets
Dubai’s Virtual Asset Regulatory Authority (VARA), has issued its Virtual Assets and Related Activities Regulations 2023. The Regulations set out a comprehensive Virtual Asset (VA) Framework built on principles of economic sustainability and cross-border financial security. The UAE has remained committed to enabling these drivers safely, updating its oversight and regulatory approach, and addressing global risks of money laundering (ML) and terrorist financing (TF), arising from the potential misuse of new technologies.
The VA Framework is structurally designed to offer regulatory certainty – allowing the market to have greater clarity on the expected level of operator responsibility. It also mandates gold-standard risk assurance and Anti-Money Laundering (AML) standards to be applied by licensed entities within the Emirate.
His Excellency Helal Saeed Almarri, Director General Dubai’s Department of Economy & Tourism, and Chairman of VARA’s Executive Board said, “Dubai’s D33 Economic Plan has outlined our mission to establish the Emirate as the capital of the Future Economy anchored by Metaverse, AI, Web3.0, and Blockchain. In Q1-2022, VARA was launched as the world’s only independent and specialist regulator for Virtual Assets to serve as the accelerator for a truly borderless Digital Economy. Ahead of its first anniversary since its establishment, VARA launches the first-of-its-kind VA framework structured to accelerate our New Economy agenda, augmenting secure, and sustainable ‘global’ market growth. This custom-designed construct reflects UAE’s commitment to building responsible safeguards and Dubai’s confidence in delivering a progressive VA ecosystem that nurtures next-gen innovation.”
As the Authority is mandated to provide VA oversight across the Emirate of Dubai [except DIFC], VARA will facilitate VA-associated economic stability, investor protection, and jurisdictional resilience. The new regulations span a comprehensive breadth of seven licensed VA activities – Advisory services, Broker-Dealer services, Custodial services, Exchange services, Lending-Borrowing services, Payments, and Remittances services, and VA Management and Investment Services. Additionally, issuance is a regulated activity under the VARA regime, to allow consumers to make a more informed decision on new tokens being launched in Dubai, and the associated obligations of the issuer.
Existing MVP Operational license applicants [and holders of either the Provisional or Preparatory MVP licenses], legacy UAE-based Virtual Asset Service Providers (VASPs), and new market entrants will be provided with a route toward full FMP licensing. All VASPs offering VA services to the Dubai market prior to the publication of the FMP Regulations will be required to register with VARA and become fully compliant with the final rules. Any breach of this condition will be subject to regulatory action.