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Developments in Dubai: Digital Assets Regulation and VARA

Dubai is positioning itself as a leading hub for the virtual assets industry, and the Virtual Assets Regulatory Authority (VARA), established in 2022, plays a crucial role in regulating and overseeing this sector. In this note, we take a quick look at the key characteristics of the regime.

A Comprehensive Regulatory Framework

VARA has established the Virtual Assets and Related Activities Regulations 2023, which provide a comprehensive framework for the regulation of virtual assets. These regulations cover seven licensed virtual asset activities, including advisory, broker-dealer, custody, exchange, lending and borrowing, payments and remittance, and virtual assets management and investment services.

Economic Sustainability and Consumer Protection

VARA's regulatory approach is built on the principles of economic sustainability and consumer protection. The sustained growth of virtual assets requires robust regulation to protect investors and maintain high levels of risk assurance. VARA aims to enhance the credibility and reputation of the virtual assets industry in Dubai.

Licensing of Virtual Asset Service Providers

VARA publishes a register of licensed Virtual Asset Service Providers (VASPs) operating in Dubai. These VASPs undergo a two-step licensing process to ensure compliance with regulations. Market notifications are published, for example, when enforcement action is taken, or an unauthorised firm is undertaking regulated business.

Independence of the Regulatory Authority

VARA is an independent regulator for virtual assets in Dubai. It is affiliated with the Dubai World Trade Centre Authority (DWTCA) and acts as a trusted regulatory authority for the virtual asset space.

Regulation of Various Virtual Assets

VARA's jurisdiction covers a broad range of virtual assets, including cryptocurrencies like Bitcoin and non-fungible tokens (NFTs). The regulatory perimeter is defined broadly to give VARA discretion in determining the applicability of the law.

Cross-Border Financial Security

VARA aims to facilitate virtual asset innovation while ensuring cross-border financial security. By establishing international standards for virtual assets, VARA contributes to Dubai's digital economy. The VARA framework is designed to provide an easy to replicate framework for regulation, fostering global cooperation.

How can Surety help?

Considering applying to be a VASP under the VARA regime? Surety allows you to easily compare the VARA requirements with your other operating jurisdictions, identify control and compliance gaps and trace back your compliance state to the underlying regulations.

Identify efficiencies and demonstrate an effective control environment to your regulators. Globally. Get in touch to see how Surety can help.

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