VARA – which is the Virtual Assets Regulatory Authority in Dubai – provides seven types of regulated virtual asset activity licences. “These businesses seek voluntary registration and want to benefit from supervision by a reputable regulator. This reassures investors and counterparties that the company they are dealing with is subject to regulation and supervision of known specialized virtual assets regulator.”
Further consolidation of the virtual asset licensing regime in Dubai is the obvious next step. Once the IDQs are handed in, entities that qualify for the ‘Full Market Product’ (FMP) licence will commence their transition to being a VARA regulated operation by August 31.
“VARA has been working closely with both DET (Department of Economy & Tourism) and the emirate’s free zone authorities to ensure a smooth transition for legacy Virtual Assets Service Providers (VASPs) in Dubai,” said Henson Orser, CEO, VARA.
“This transition was further supported by VARA’s Minimum Viable Product (MVP) program, a timebound initiative that enabled new applicants to set up operations and become market ready until official release of our full suite of regulations on February 7, 2023.
“The introduction of the Virtual Assets and Related Activities Regulations gives the existing companies, a clear timeline to ensure that they submit their initial disclosures by the end of April.”
Recently, the European Union’s parliament pushed voted decisively for laws to govern activities in the crypto space, with these likely to come into effect sometime next year. At some point, the US too will have in place laws that govern crypto – and at the same time make it more mainstream.
When it comes to governmental oversight, Dubai and Abu Dhabi have early-mover advantages in the crypto space. Bahrain is the other Gulf jurisdiction that has made headway.
Extending that authority and oversight is what Dubai and VARA is doing through the April 30 deadline on IDQ submissions. “Ensuring that our marketplace is secure, participants are responsible, and investors and consumers are effectively protected is our top priority,” said Helal Saeed Almarri, Director-General of Dubai’s Department of Economy & Tourism, in a recent statement.
“With key stakeholders responsible for commercial licensing across the Emirate working closely to deploy VARA’s full market regulatory construct, we aim to set a benchmark that positions Dubai as a global role model for VA sector development.”
For Dubai based crypto service businesses, the licensing fee is Dh40,000 to provide advisory and payment services as well as remittance services individually. For the remaining services, it is Dh100,000 for each of the activity/service. (These fees are not inclusive of the annual supervision fee.)
The VARA directive ‘entails monitoring trading activity in virtual asset services to prevent price manipulation and create high standards for personal data protection,” said Krishen. “The regulations apply to all virtual asset service providers (VASP) offering services in Dubai (excluding the DIFC).”
The regulation also covers large proprietary traders and voluntary registration for other market participants. (Large proprietary traders are specified as entities investing in their own virtual asset portfolio at or above $250 million during a rolling 30 calendar-day period.)
According to industry sources, Dubai and UAE will be better off by having a full or near-full set of rules to govern crypto businesses. Bitcoin and its peers may have had a terrible 2022, but that doesn’t seem to eroded retail investors’ interest in these alt-assets. If anything, the upturn in values since the turn of the year may have even solidified that.
That would in turn mean more protection for individuals or businesses taking exposures in crypto. This is what the VARA moves with the IDQ will trigger.
عبدالرحمان زمین پیما
Author
آرمان جعفری
Author
