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  • L Misthos and M Bacina

Dubai releases virtual asset regulations


Dubai's Virtual Asset Regulatory Authority (VARA), the regulator in charge of overseeing cryptocurrency laws within Dubai, has issued the Virtual Asset and Related Activities Regulations. The Full Market Product (FMP) regulations are centered around economic sustainability, cross-border financial security and an updated licensing framework.


The regulations offers Virtual Asset Service Providers (VASPs) an update regulatory framework with rules that apply to particular operations and business models. Attaining VASP status under the regulations is a 4-stage licensing process whereby applicants progress through a tiered approval gateway.


Stage one is a provisional permit, followed by a two-step stage 2 (preparatory) and stage 3 (operating) Minimum Viable Product (MVP) licence. Once the first three stages have been fulfilled entities will be entitled to obtain an FMP licence. To date, no VASP has progressed beyond stage 2.


The regulations provide clarity on, among other things, issuance of virtual assets, regulated activities, licensing requirements, VARA's powers, AML/CTF obligations and marketing regulations and offences.


To assist VASPs in complying with the regulations, VARA has also released a number of rulebooks that provide guidance for VASPs carrying on a specific type of virtual asset service. The following rulebooks have been provided by VARA and must be complied with by any VASP that fulfils the licensing requirements:

  • A Company Rulebook that provides guidance for VASPs regarding company structure, governance, general requirements, insolvency and rules on material changes to business or control;

  • A Compliance and Risk Management Rulebook which outlines general principles of compliance management, tax reporting compliance, AML/CTF compliance, client money rules, client virtual asset rules and anti-bribery and corruption compliance;

  • A Technology and Information Rulebook outlining rules relating to technology governance, controls and security, personal data protection and confidential information; and

  • A Market Conduct Rulebook that covers regulations on marketing, advertising, promotions, client agreements, complaints, investor classifications, public disclosures, market transparency and broad prohibitions.

VARA has also released seven activity specific rulebooks to cater for risk associated with the provision of each virtual asset activity. VASPs are only required to comply with the rulebooks insofar as they are licensed to offer the activity. The include:

  • An Advisory Services Rulebook to clarify the rules, procedures and public disclosures around VASPs providing advisory services;

  • A Broker-Dealer Services Rulebook to clarify the rules, procedures and public disclosures around VASPs providing broker-dealer services;

  • A Custody Services Rulebook to clarify board requirements, policies, procedures, public disclosures, asset storage and custody for VASPs providing custody services;

  • An Exchange Services Rulebook to clarify the board requirements, policies, procedures, exchange services rules and margin trading rules for VASPs providing exchange services;

  • A Lending and Borrowing Services Rulebook to clarify the policies, procedures, public disclosures as well as lending and borrowing services rules for VASPs carrying on a lending and borrowing service;

  • A Virtual Asset Management and Investment Services Rulebook to clarify policies, procedures, public disclosures and management and investment services rules for VASPs handling virtual asset management and investments; and

  • A Virtual Asset Issuance Rulebook that outlines approval requirements, whitepaper obligations, compliance obligations and supervision, examination and enforcement obligations for VASPs that plan to issue a virtual asset.

Following the announcements of UK's crypto consultation, the United States' crypto roadmap, Hong Kong's stablecoin licensing regime and Australia's Token Mapping Consultation Paper crypt asset regulation is a key focus of governments this year.


Dubai has become the first nation in the Middle East Africa South Asian (MEASA) group of countries to release a comprehensive framework regulating virtual assets and virtual asset service providers. VARA aims to create an easy to replicate framework to regulate the industry.


Other countries, like Australia, will need to review these regulations closely as they seek to regulate the crypto-asset space to ensure jobs and growth remain in those countries.



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