VARA issues Regulations for Dubai Virtual Asset Regime

On 7 February 2023, the Dubai Virtual Asset Regulatory Authority (VARA) issued the Virtual Assets and Related Activities Regulations 2023 (VARA Regulations) which set out VARA’s comprehensive Virtual Asset Regime for the Emirate of Dubai in the United Arab Emirates (UAE).

VARA’s Virtual Asset Regime is the latest development which demonstrates the UAE’s status as a leading global jurisdiction for virtual assets.

What you need to know

The VARA Regulations have been issued in accordance with Law No (4) of 2022 Regulating Virtual Assets in the Emirate of Dubai which previously established VARA as the virtual asset regulator for Dubai.

The VARA Regulations follow the issuance of Cabinet Decision No (111) of 2022 on the Regulation of Virtual Assets and their Service Providers under which it is prohibited for any person to engage in virtual asset activities in the UAE (excluding the ADGM and DIFC) without obtaining approval and a licence from the UAE Securities and Commodities Authority (SCA) or a local licensing authority (such as VARA).

VARA also issued a range of rulebooks, including:

• four Compulsory Rulebooks (Company; Compliance & Risk Management; Technology & Information; and Market Conduct) which set out the mandatory obligations for Virtual Asset Service Providers (VASPs) who fulfil VARA’s licensing requirements;
• seven Activity-Specific Rulebooks which will apply to VASPs on the basis of each activity they are licensed by VARA to provide; and
• a Rulebook setting out the rules for the issuance of virtual assets.

The Regulations and Rulebooks are in addition to the Marketing Guidelines previously issued by VARA in 2022.

What you need to do

For new and existing VASPs, it is important to consider whether a licence is required to be issued by VARA under its Virtual Asset Regime and whether it is the most appropriate jurisdiction in the UAE for your business model and activities.

Please reach out to Gregory Man and Jessica White if you would like some guidance on the implications of VARA’s Virtual Asset Regime.