The VARA license is provided to the businesses involved in trading of virtual assets by the Virtual Assets Regulatory Authority (VARA). The government of UAE has formed VARA due to the emerging trend and regulate the activities related to virtual activities and virtual assets. The steady growth of virtual assets needs legal supervision which is designed on the basis of economic stability, customer protection and cross border financial security.
The role of VARA is very important in the digital economy of Dubai, as it safeguards and regulates the virtual assets space. VARA has created international standards for virtual assets that ensures Dubai maintains and strengthens its position as the global leader of financial technology. Let us look at the regulations of VARA in detail.
VARA Regulations & Guidelines
The virtual Assets Regulatory Authority (VARA) of Dubai has provided its regulations related to virtual assets. These regulations present an effective framework for visual assets which is based on fundamentals of economic strength and transborder financial stability.
VARA Regulations
VARA Dubai is the first and personalized system for virtual assets and these regulations are crafted to deal with the allowed services and activities within the country. After the final approval given by the directors of the board, the law was published in the year 2023. The Law No.4 of 2022 Regulating Virtual Assets in Dubai states the definition of virtual assets.
VARA is the sole authority managing virtual assets in the free zones and mainland of Dubai except within Dubai International Financial center (DIFC).
VARA License for New Firms in the UAE
The administration of VARA welcomes new firms that want to work in the UAE and get their VASP license. The Virtual Asset Service Provider license is given to any firm trying to start their virtual asset firm in Dubai before they start running their business.
Firms can submit their applications through Dubai Economy and Tourism (DET) if you want to start your business in the mainland or any free zone except for DIFC.
How to Apply for a VARA Dubai License? (New Company)
The application process for the VARA license consists of two steps. The first step is getting approval for starting a new business and its operations and the second step is applying for a VASP license.
Step 1.
- In the first step, the firm must submit an initial disclosure questionnaire (IDQ) to the department of Dubai Economy and Tourism or the relevant freezone authorities.
- Submit the required documents, which include business plan and details about the company owners and partners.
- Paying initial fee to start the application review process. This fee is mostly half of the application fee.
- Get the approval to Start Your Business and complete the setup of your business including getting an office and hiring employees.
Important Point. At this stage, the company can not start its virtual asset activities. VARA will not issue the license to the company if their business activities do not fall under the regulations or if they are not following the required standards.
Step 2.
After getting the approval of incorporation, the firm can apply for a VARA Dubai license by following the given steps.
- After receiving your approval of incorporation, you need to submit the required documents of VARA.
- Get feedback from VARA on the submission of documents through meetings or interviews.
- Submit the remaining license application fee and administration fee for the first year.
- After the fee payments you’ll get your VARA Dubai license.
VARA License for Existing Firms
VARA supports the entire Virtual Assets industry in the Emirates and plays an important role in promotion of growth and economic sustainability. It introduced the Dubai Legace Programme for existing firms involved in virtual activities before early 2023.
Through this program, firms can easily shift to the regulatory framework of VARA Dubai. There are many training and awareness programs related to transition under VARA.
The regulatory process of VARA Dubai requires legacy VA businesses to fill the questionnaire of initial disclosure. After the application approval, the firm can obtain the legacy operating permit and NOC. After getting the legacy operating permit, if the firm meets all the VARA regulations, the VASPs can smoothly transition to a full virtual assets regulatory framework.
The companies also get a 50% discount on the application fee and reduces the requirement of capital. The permit is valid for one year.
Legacy Operating Permit (LOP)
With the help of a legacy operating permit, the company can easily transition under the VARA regulations in a steady way and gives multiple discounts and reliefs. The permit can be obtained through the Economy and Tourism Department of Dubai or relevant Free Zone authority.
Documents Required for VARA License
Given below are the documents required for getting VARA Dubai license, although you may need to submit additional documents.
- Entity incorporation certificate
- List of company’s beneficial owners
- Evidence of source of funds
- Business framework
- Company’s governance framework
- Local entity website
- Passport, CV, job description
- Business plan
- Budget estimation
- Paid-up capital proof document
- Capital lock-up
- Saving account information
- Certificate of insurance
- Plan of succession
- Liquidation plan
- Analysis of associated entities
Objectives of VARA
The main objective of VARA are,
- VARA aims to make Dubai a hub for virtual assets and related services in the local and global region.
- To encourage joint efforts to regulate the process in order to protect the customers and prevent any kind of illegal activities.
- By promoting virtual assets and attracting new investments in the city of Dubai.
- By increasing awareness among customers about virtual assets and related services encouraging innovation and opportunities.
- To establish rules and regulations related to virtual assets and services, managing virtual assets platforms and all other related matters.
Advantages of Getting VARA License
The Virtual Assets Regulatory Authority is the first regulatory entity that offers licenses for virtual assets related firms in Dubai. Its benefits are as follows.
- With the help of a VARA Dubai license you can legally operate your business, under the laws of VARA regulatory authority.
- VARA license increases your trust among investors as it shows you are following the regulation of local authorities.
- VARA provides a supportive environment to firms which helps with innovation and development.
- The authorities offer various licensing options according to the diverse needs of industry which helps the new firms to choose a license according to their needs.
- The authorities have set cybersecurity policies to protect businesses associated with virtual assets.
- There are different training sessions for licensed companies to make sure they follow all the regulations. The firms are also required to train their employees and management to keep with the fast changing industry of virtual assets.
Types of firms that can get VARA license
VARA provides license for a wide range of virtual asset activities, here is the list of some of the firms,
- Virtual Asset Consulting Services
- Virtual Asset Stockbroker Services
- Virtual Asset Safekeeping Services
- Virtual Asset Exchange Services
- Virtual Asset Lending and Borrowing Business
- Virtual Asset Investment and Management Services
- Virtual Asset Settlement and Transfer Services
Bottom Line
In short, Dubai has launched the VARA license to become the leading hub in the local and international virtual assets industry. Its regulations are transparent and effective to ensure the morality of the virtual assets industry in the country. The industry is continuously growing and evolving, therefore, it is important for Virtual Assets Services Providers (VASPs) to stay updated with new regulations and get legal assistance.
For your VASP business setup, Contact Al-Riyady. Our expert team has years of experience and we provide initial consultation, help gather necessary documents and VASP license. We can help you submit a complete and comprehensive license application. Our team can provide you with expert Tax Consultation, Auditing Services and Business Feasibility Study.
