Dubai, known for its ambitious vision and progressive stance on technology, is setting its sights on becoming a global hub for cryptocurrencies. At the heart of this bold initiative lies the Virtual Assets Regulatory Authority (VARA), an organization dedicated to paving the way for the widespread adoption of cryptocurrency in the UAE.

VARA isn’t just another regulatory body—it’s a game-changer. With a laser focus on protecting investors, establishing global governance standards, and bolstering Dubai’s vision for a borderless economy. In short, VARA is laying the groundwork for Dubai to emerge as a global capital for advanced technologies.

What is VARA?

Vara application

VARA stands for Virtual Assets Regulatory Association. Established in March 2022 in response to Law No.4 of 2022, VARA actively regulates, supervises, and oversees Virtual Assets (VAs) and VA Activities across Dubai’s Emirate. Covering all zones, including Special Development Zones and Free Zones, VARA plays a pivotal role in shaping Dubai’s legal framework for virtual assets. Its mission is to safeguard investors and establish global standards for governance within the Virtual Asset industry, aligning seamlessly with Dubai’s vision for a borderless economy and broader goals for economic development and innovation.

With a focus on ensuring compliance with regulations, VARA implements measures, monitors market activities, and fosters a transparent and secure environment for participants in the virtual asset ecosystem. Through its proactive initiatives, VARA aims to bolster trust, stability, and confidence in Dubai’s Virtual Asset industry, further solidifying the emirate’s status as a premier hub for digital innovation and financial services.

In short, through its advanced framework for virtual assets, VARA is not only raising the bar for regulatory excellence in the UAE and the Middle East but also setting new benchmarks on a global scale. As the regulatory body overseeing virtual asset firms in Dubai, VARA ensures compliance with rigorous standards, creating a safe and transparent environment for investors and market participants alike.

Now, whether you are a new firm or an existing one, VARA is committed to regulating Virtual Asset firms to ensure proactive and responsible market participation. Below is a step-by-step guide to help you navigate through the application process:

How to Apply for VARA License

For new firms applying for VARA License, there are two stages in every application: the initial approach application and the VASP License application.

Initial Approval Application for New Firms

Step #1 Submit Initial Disclosure Questionnaire (IDQ):

Begin by submitting an IDQ to Dubai Economy & Tourism (DET) or the relevant Free Zone Authority (FZA). This questionnaire will provide essential information about your firm.

Step #2 Provide Additional Documentation:

Along with the IDQ, submit additional documentation including a business plan and details of the firm’s beneficial owners and senior management.

Step #3 Pay Initial Fees:

Pay the initial fees, typically 50% of the license application fee, required to commence the application review process.

Step #Receive Initial Approval:

Upon approval, finalize the firm’s legal incorporation and complete operational setup such as office space rental and employee onboarding. Note that at this stage, the firm is not permitted to carry out Virtual Asset activities.

VASP Licence Application for New Firms

Step #5 Prepare Documentation:

Once you receive the initial approval, prepare and submit documentation as per VARA’s guidance.

Step #6 Await Feedback:

Expect feedback from VARA which may include meetings, interviews, and requests for further documentation.

Step #7 Pay Remaining Fees:

Pay the remaining portion of the application license fees along with the first year’s supervision fees.

Step #8 Receive VASP Licence:

Upon completion and approval, you will receive a VASP Licence, potentially subject to operational conditions.

For Existing Firms Applying for VARA License

Meanwhile, there is another procedure for existing and operational crypto and web3 companies applying for VARA license which has a shorter process.

Step #1 Complete IDQ:

If you are an existing firm carrying out Virtual Asset Activities in Dubai, ensure you have completed the Initial Disclosure Questionnaire (IDQ) with your commercial licensor (DET or relevant FZA).

Step #2 Contact Commercial Licensor:

If you have not completed the IDQ by the specified deadline, urgently contact your commercial licensor to arrange submission.

Step #3 VASP Licence Application:

Upon receipt of the Application Acknowledgement Notice (AAN), complete the VASP Licence application by the specified deadline.

Step #4 Follow the Application Process:

Follow the steps outlined above for new firms in completing the VASP Licence application.

Final Thoughts

VARA reserves the right to withhold licenses if a firm’s activities fall outside the regulatory perimeter or if appropriate standards are not met. In summary, VARA is the driving force behind Dubai’s journey towards becoming a hub for innovative fintech and blockchain technologies. Its commitment to investor protection, market transparency, and regulatory excellence makes VARA the cornerstone of Dubai’s thriving VA ecosystem.

Notably, NH Management has worked with some of established cryptocurrency exchanges in their UAE business setup and pursuit of a VARA license. Simply engage with our crypto business consultants by calling 800 64626 or emailing us at [email protected] to learn more.

 

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