Virtual Assets Regulatory Authority (VARA) Approval in Dubai

The Virtual Assets Regulatory Authority (VARA) regulates, supervises, and oversees virtual asset activities in Dubai. As the world’s first independent virtual asset regulator, VARA provides a transparent, globally aligned framework for businesses operating in the crypto and digital asset space.

Businesses regulated under VARA benefit from enhanced credibility, access to Dubai’s digital ecosystem, and opportunities for global expansion.

1. Benefits of VARA Licensing for Businesses

VARA licensing offers significant advantages to businesses in the virtual asset ecosystem:

Enhanced Credibility and Trust

• Demonstrates compliance and transparency

• Builds confidence with investors, clients, and stakeholders

Access to Dubai's Digital Economy

• Collaborate with innovative companies

• Utilize advanced infrastructure and talent pool

Global Expansion Opportunities

• VARA’s framework aligns with international standards

• Facilitates cross-border operations

Innovation-Friendly Environment

• Supports blockchain, DeFi, tokenisation, and other emerging technologies

• Encourages innovation while ensuring regulatory compliance

Legal and Regulatory Support

• Clear guidance reduces ambiguity

• Allows businesses to focus on growth and operations

Investor Confidence & Market Integrity

• AML/CFT compliance protects investors

• Attracts venture capital and institutional funding

Protection Against Illicit Activities

• Prevents unintentional involvement in fraud or illegal activities

• Strengthens business reputation

Competitive Advantage

• VARA licensing differentiates firms from unregulated competitors

• Supports long-term sustainability

Educational and Awareness Initiatives

• Promotes informed adoption of virtual assets

• Builds a knowledgeable consumer base

Market Stability

• Active monitoring and risk management reduces volatility

• Provides a predictable operating environment

2. VARA Virtual Asset Service Provider (VASP) Licenses

All entities engaging in virtual asset activities in Dubai (excluding DIFC) must obtain a VARA license before starting operations. Licensing can be applied through:

• Dubai Economy & Tourism (DET): Mainland-based firms

• Dubai Free Zones (FZ): Free zone-based firms (excluding DIFC)

Types of VASP Licenses

VARA offers licenses for a wide range of activities:

1. Virtual Asset Advisory Services

2. Virtual Asset Broker-Dealer Services

3. Virtual Asset Custody Services

4. Virtual Asset Exchange Services

5. Virtual Asset Lending and Borrowing Services

6. Virtual Asset Management and Investment Services

7. Virtual Asset Transfer and Settlement Services

8. Virtual Asset Issuance License (Category 1)

Application Process:

• Stage 1: Approval to Incorporate (ATI) – set up legal entity

• Stage 2: VASP License Application – submit full operational documentation

3. Documents Required for VASP License Application

General Business & Compliance Documents

• Business plan, beneficial owners, senior management profiles

• Enterprise Risk Management framework

• Compliance manuals, monitoring programs, and ABC policies

• AML/CFT policies and program status

• Outsourcing policies and agreements

• Conflicts of Interest and Insider Lists

• Customer journey workflows

Terms & Policies

• Client agreements, privacy policy, marketing plan

• New product, market conduct, VA listing policies

• Records management policy

For Asset Managers (if applicable)

• Fund details and asset exposure

Technology & Security Documents

• Infrastructure design and risk assessment

• Business continuity and IT disaster recovery plans

• Key/wallet management policies

• Public keys, wallet addresses, information security policy

• Penetration testing results

Activity-Specific Documentation

• Proprietary trading, DeFi activities, or VA payment supporting information

4. How to Apply for a VARA VASP License

For New Firms

Stage 1: Initial Approval

1. Submit Initial Disclosure Questionnaire (IDQ) to DET or Free Zone authority

2. Provide business plan, beneficial owners, and management details

3. Pay 50% of license application fee

4. Receive Initial Approval → legal incorporation and operational setup allowed

Stage 2: Full VASP License

1. Submit detailed documentation to VARA

2. Engage in VARA’s review process (interviews, additional info requests)

3. Pay remaining application and supervision fees

4. Receive VASP License with operational conditions

Note: Virtual asset activities cannot begin before obtaining the full VASP license.

For Existing Firms (Dubai Legacy Programme)

VARA introduced the Dubai Legacy Programme for firms operating before February 7, 2023:

1. Registration with VARA: Submit Initial Disclosure Questionnaire (IDQ)

2. Application Acknowledgment Notice (AAN): Proceed to apply for:

   • Legacy Operating Permit (LOP) or

   • No Objection Certificate (NOC)

3. Legacy Operating Permit (LOP) Benefits:

   • Compliance with VARA regulations over 12 months

   • Up to 50% reduction in licensing fees

   • Reduced capital requirements

Summary

Obtaining VARA approval provides legal certainty, credibility, and global opportunities for businesses operating in Dubai’s virtual asset ecosystem. From licensing to compliance, VARA ensures businesses operate in a safe, regulated, and innovation-friendly environment.