The UAE Securities and Commodities Authority has opened applications for licensing companies that wish to offer virtual asset services, following the board of directors’ approval to regulate virtual asset service providers.
The Virtual Assets Regulatory Authority (VARA) has established clear requirements for the full regulation of the virtual asset sector under VARA in Dubai, including all businesses associated with the sector.
VARA is working closely with Dubai’s Department of Economy and Tourism (DET) and Free Zone Authorities (FZAs) to receive initial disclosure questionnaires (IDQs) by April 30, 2023, as the first step towards migrating the market to a regulated regime. All companies operating or intending to operate in the virtual asset sector in or from Dubai must be licensed by VARA under Cabinet resolution No. 111 of 2022, which came into effect on January 15, 2023. DET and FZAs are working to facilitate the transition of existing virtual asset service providers (VASPs) into the VARA regulatory regime and formalise the application process for new regulated licenses.
The goal is to establish Dubai as a global role model for virtual asset sector development while ensuring that the marketplace is secure and participants are responsible.
Legacy market operators carrying out virtual asset activities in Dubai (excluding DIFC) are required to declare their desire to undertake regulated activities by submitting an IDQ to their current licensing authority – DET or any FZAs – by April 30, 2023. Upon receipt of an Application Acknowledgement Notice (AAN), operating VASPs will take appropriate action for those requiring regulation or registration under VARA by August 31, 2023.
“Dubai’s Free Zones have been an integral part of the business landscape for decades, providing start-ups, entrepreneurs and overseas companies looking to establish regional headquarters with access to a geographically strategic, multicultural, dynamic and bureaucracy-free environment,” said Dr. Mohammed Al Zarooni, Secretary-General of the Dubai Free Zones Council.
“We have witnessed growing interest from virtual assets-focused entities who are keen to adhere to the VARA licensing regime. Adopting the new regulations, provides a safe and sustainable operating environment for VA companies and further establishes Dubai as a credible destination for this sector”.
A total of seven distinct types of regulated VA activity licences can be applied for: Advisory Services, Broker-Dealer Services, Custody Services, Exchange Services, Lending and Borrowing Services, Transfer and Settlement Services and Management and Investment Services.
According to Henson Orser, the Chief Executive Officer of VARA, the organisation has been working closely with Dubai’s Department of Economy and Tourism and Free Zone Authorities to facilitate a smooth transition for legacy Virtual Asset Service Providers (VASPs) in Dubai, many of whom were pioneers in this area.
“This transition was further supported by VARA’s Minimum Viable Product (MVP) programme, 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 7th February 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,” said Orser.
