The UAE has emerged as a paradise for innovators and is actively working to establish regulations for Virtual Assets, serving as a global example. If you wish to join this transformative journey, apply for a license under VARA rules and broaden your presence in the Virtual Asset realm. We are here to assist you in navigating the legal and regulatory aspects of this endeavor.
“At Smart Zones® UAE, our goal is to offer customized legal and regulatory solutions to our clients who engage in virtual asset-related businesses, all while ensuring compliance with existing legislation.”
As the world's first independent regulator of virtual assets worldwide, VARA operates as a transparent and reliable guiding entity in the rapidly expanding realm of Virtual Assets. Its goal is to extend its influence globally by establishing a straightforward regulatory framework for the industry.
VARA aims to reduce risks, facilitate cross-border operations, and promote innovation, ensuring secure market acceptance and growth. This is achieved through leveraging insights from global experts and organizations, as well as collaborating with essential regional financial regulatory authorities.
Objectives of Virtual Assets Regulatory Authority (VARA)
Overall, VARA's objectives aim to establish Dubai as a global leader in the responsible and sustainable development of the virtual assets industry. By fostering a thriving ecosystem built on trust and transparency, VARA seeks to benefit investors, businesses, and the economy as a whole.
Positioning Dubai as a regional and worldwide centre for Virtual Assets and associated services, as well as developing a digital economy in the city to increase its competitiveness both locally and globally.
Inspiring investors and promoting awareness of Virtual Asset services, products, and innovation to unlock genuine opportunities.
Promoting the burgeoning realm of virtual assets, enticing investors and businesses to establish operations in Dubai.
Fostering shared responsibility for crafting effective legislation, safeguarding investors, and combating illicit practices in collaboration with relevant institutions.
Creating regulations, norms, and standards to govern Virtual Asset Platforms, Service Providers, and related activities.
Advisory Services
Advisory Services involve providing, delivering, or agreeing to offer personal recommendations to a client. This can be at the client's request or initiated by the entity providing the advice. The focus is on one or more acts or transactions related to any Virtual Asset.
Custody Services
The term 'Custody Services' pertains to the protection of Virtual Assets for or on behalf of another Entity, exclusively on confirmed orders from or on behalf of said Entity. All VASPs must adhere to the Rules governing the storage and custody of their clients' Virtual Assets. A Custody Services License is granted only to VASPs that segregate their clients' assets in distinct VA Wallets.
Exchange Services
The term 'Exchange Services' may encompass any of the following:
- Conducting an exchange, trade, or conversion of Virtual Assets and currency.
- Executing an exchange, trade, or conversion involving one or more Virtual Assets.
- Matching orders between buyers and sellers and facilitating an exchange, transaction, or conversion between [i] Virtual Assets and money [ii] one or more Virtual Assets.
- Maintaining an order book in support of items [a], [b], or [c] above.
Broker - Dealer Services
The term 'Broker-Dealer Services' encompasses the following:
- Arranging orders between two Entities for the purchase and sale of Virtual Assets.
- Soliciting or accepting orders for Virtual Assets and receiving cash or other Virtual Assets in exchange for such orders.
- Facilitating the matching of transactions in Virtual Assets between buyers and sellers.
- Acting as a dealer on behalf of the Entity for its own account in Virtual Assets transactions.
- Making a market in Virtual Assets using client assets.
- Providing placement, distribution, or other issuance-related services to clients issuing Virtual Assets.
Lending and Borrowing Services
The term 'Lending and Borrowing Services' pertains to the execution of a contract in which a Virtual Asset is transferred or lent from one or more parties (the Lender(s)) to one or more other parties (the Borrower(s)). The Borrower(s) undertake to return the same, at the request of the Lender(s), either during or at the end of the agreed-upon period, either to its interest or on behalf of others' interest.
Other Virtual Assets Activities
Prior to participating in virtual asset operations within Dubai, any VASP wishing to offer the aforementioned services is required to submit an application for and obtain a license from VARA. As no virtual asset activity is exempt from regulatory oversight, obtaining a VARA license may be necessary for any virtual asset service or activity, including, but not limited to, those offered by DLT service providers. These DLT service providers must evaluate whether they are involved in virtual asset activities falling within the specified categories.
Management and Investment Services
The term 'VA Management and Investment Services' involves acting as an agent or fiduciary on behalf of an Entity, or assuming responsibility for the management, administration, or disposal of that Entity's Virtual Assets. Examples include, but are not limited to
- investment management services or other management of VAs; and
- Accepting responsibility for the 'staking' of VAs to gain fees or other values provided to validators and/or node operators of a 'proof-of-stake' DLT.
For VA Proprietary Trading, obtaining a VARA no objection certificate is mandatory to affirm that the activity can be conducted under regulatory control without requiring a VA License. Additionally, proprietary trading exceeding specified trading volumes must be registered with VARA.
VASPs are required to reach out to their commercial licensors (Free Zones or DET) to submit their Initial Disclosure Questionnaire for the issuance of a Proprietary Trading NOC.
Prior to undertaking such actions, issuers of Virtual Assets must obtain VARA approval for their whitepaper as per the "VA Issuance Rulebook."
Comprehending the newly enacted virtual assets regulation in Dubai can be challenging. It requires a thorough understanding and recall of the laws to avoid any regulatory consequences. We are here to ease that burden.
Smart Zones® UAE stands out as a prominent legal entity in the UAE specializing in the fintech, blockchain, and cryptocurrency sectors. With our footprint in diverse jurisdictions worldwide, we possess a keen understanding of the regulations and compliances crucial for business operations. We offer comprehensive solutions, covering everything from the legal structuring of your business to licensing requirements.
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A crypto license is a regulatory authorization that allows a business to operate cryptocurrency-related activities in Dubai. It is required to ensure compliance with local laws, protect investors, and maintain the integrity of the financial system.
Getting a trading license in UAE for crypto should take approximately 4 weeks.
In order to obtain a UAE crypto License, you must ensure you meet the following eligibility requirements.
- A commercial License form (requiring the following documents)
- ID
- Supporting documentation for registered address of residency
- Supporting documentation verifying company’s name
- Comprehensive business plan
- Passport copies of all partners in the business
- A clean crypto wallet with no fraudulent behaviour or activities
- A business runway of at least 6 to 12 months of operation
- Incorporation of crypto assets with the “UAE Free Zone” departments that are approved by the government
- A detailed business plan
The VARA Virtual Assets and Related Activities Regulations 2023 are specific rules for Virtual Asset Service Providers (VASPs). These rules aim to provide clear guidelines for offering Virtual Asset services and activities.
VARA's licensing framework is in place to oversee and regulate VASPs. This regulation ensures consumer protection and prevents illegal financial activities. The framework includes various license categories for different activities.
- 1. License Categories: VASPs can choose from various license categories based on the specific activity they intend to offer. Each activity requires a separate application. These categories include VA Advisory Services, VA Broker-Dealer Service, VA Custody Service, VA Exchange Services, VA Lending and Borrowing Services, VA Management and Investment Services, and VA Transfer and Settlement Services.
- 2. Virtual Asset Issuance: Issuers of Virtual Assets also need approval from VARA under the VA Issuance Rulebook.
- 3. No Exemptions: No Virtual Asset activity is exempt from regulatory supervision. Any VA service or activity requires a VARA license, registration, or No Objection Certificate (NOC).
- 4. VA Proprietary Trading: VA Proprietary Trading requires a VARA NOC for regulatory oversight if the trading is above certain volumes.
- 5. DLT Service Providers: DLT service providers engaged in VA activities within the defined categories need a VARA License. Those not currently offering VA activities can voluntarily register with VARA.
VASPs must ensure that their Senior Management team includes qualified individuals and appoint two 'Responsible Individuals' (RIs). These Responsible Individuals should be full-time employees of the VASP, Fit and Proper Persons, and residents of the UAE or UAE passport holders. Fit and Proper Persons must be approved by VARA.
The UAE boasts a highly welcoming atmosphere for businesses, featuring a minimal corporate tax rate and an array of free zones that grant full ownership and tax-free earnings. The country offers a favorable regulatory landscape for cryptocurrency enterprises, backed by a transparent and supportive legal structure. Moreover, the UAE hosts a flourishing community of cryptocurrency and blockchain companies, creating a nurturing environment for emerging ventures to commence their operations.
You have the opportunity to obtain a cryptocurrency license through DMCC. Cutting-edge cryptocurrency center has emerged as a leading source of cryptocurrency licenses for businesspeople and innovators. With a DMCC cryptocurrency license, you gain the authorization to engage in various cryptocurrency-related endeavors, including cryptocurrency software development, cryptocurrency management, cryptocurrency trading, and cryptocurrency consulting, among other cryptocurrency services.
Through our exclusive promotion, you can obtain a cryptocurrency license for approximately AED 48,000, which encompasses various expenses, including but not restricted to those associated with company formation and the crypto license application.
Entities need a VARA License or Acknowledgment of Application Notice (AAN) for conducting VA activities, including VA Advisory Services, VA Broker-Dealer Services, VA Custody Services, VA Exchange Services, VA Lending and Borrowing Services, VA Management and Investment Services, and VA Transfer and Settlement Services. AANs are issued to firms carrying out VA activities before 7 February 2023. Entities issuing Virtual Assets must seek VARA's approval as described in the VA Issuance Rulebook.
Event organizers must apply for event permits in Dubai (excluding DIFC) through the e-Permit system of the Department of Economy and Tourism. Apply for a VA event permit under the category "VA event" and adhere to VARA's Marketing Regulations and Guidelines.
Advertising companies must apply for permits through Dubai Municipality's central government advertising system. Select the category "Virtual Asset Activity" and adhere to VARA's Marketing Regulations and Guidelines.
Unlicensed VASPs can conduct marketing activities in or from Dubai if they obtain the relevant marketing permit. However, they are not allowed to onboard Dubai residents as customers, and all marketing materials must clearly state that products or services are not available for Dubai residents.
