Virtual Asset Regulator (VARA) published new rules for all crypto companies providing services in Dubai, excluding companies that are part of the Dubai International Financial Center. Many organizations seek to obtain a VARA license because it brings several advantages. And what services you can provide and perming requirements we will consider below.
VARA license has created a VAPS framework to manage and regulate crypto assets in the Emirates. This platform is technologically adapted for all aspects related to cryptocurrency activities. This framework will allow Dubai to become a Web3- and blockchain-enabled cryptocurrency hub.
The VARA rules include requirements for the VAPS registration and licensing process and govern cryptocurrency firms’ activities. The rules have mandatory requirements to comply with the AML policy. Organizations that comply with permitting requirements must comply with 11 comprehensive laws to maintain licensed activities with virtual assets. All control methods are considered mandatory if a company has such a permit.
Introducing a groundbreaking milestone, the VARA license establishes a robust VAPS framework that intricately manages and oversees crypto assets within the Emirates. This innovative platform is finely attuned to all facets of cryptocurrency operations, cementing Dubai’s role as a pioneering Web3 and blockchain-centric cryptocurrency epicenter. The VARA regulations encompass stringent prerequisites for VAPS registration and licensing procedures, meticulously governing the operations of cryptocurrency enterprises. These regulations inherently integrate mandatory anti-money laundering (AML) policies.
Companies in adherence to licensing prerequisites are beholden to 11 comprehensive statutes, perpetuating their licensed virtual asset pursuits. Emphasizing control methodologies as obligatory, these measures fortify licensed entities.
Territory of jurisdiction
According to VARA legislation, its jurisdiction will be exercised throughout Dubai (including free zones), excluding ADGM and DIFC.
The requirements for other regulators are as follows:
- The Central Bank can control fiat-backed payment tokens;
- UAECB controls the virtual currencies of the Central Bank;
- the organization does not need a separate licensing request from the SCA;
- A company with another financial license for virtual currency within the Dubai Free Zone may request a separate permit to conduct crypto business.
Thus, a comprehensive regulation of cryptocurrency activities is carried out in the UAE.
Consider the basic rules of the VARA regulator
By law, VARA may publish requirements and instructions for the control of financial activities with cryptocurrencies. Before starting its activities with virtual currency, the company must be licensed by VARA. We list the types of activities of companies that are subject to permitting:
- provision of consulting services;
- broker services;
- provision of deposit accounts;
- currency exchange;
- provision of credits and loans;
- making transactions;
- management and investment activities.
All organizations are required to pay taxes and registration fees. Government organizations and companies associated with the government are exempt from licensing but, in any case, must obtain confirmation of this from the VARA.
Delve into the foundational precepts of the VARA overseer. As per legal mandates, VARA retains the authority to outline prerequisites and guidelines governing financial dealings involving cryptocurrencies. A VARA license is imperative for enterprises venturing into virtual currency domains. Licensing pertains to activities including consultancy, brokerage, depositary services, currency exchange, credit provision, transactions, management, and investments. Tax contributions and registration fees are obligatory for all entities. While governmental bodies and affiliated firms enjoy licensing exemptions, VARA confirmation remains indispensable.
Consider the process of obtaining a permit
Permitting is simple; the main thing is to be attentive and responsible for all the details and requirements.
The following is required along with the permit application:
- get a temporary permit;
- provide a package of documents for pre-licensing;
- obtain an MVP license (Minimum Viable Product);
- obtain a full license for FMP products.
Because now there is a transitional period associated with innovations, VARA has licensed companies so far in the first stage or the second. To pass all four stages of obtaining a permit, you must pass all the checks associated with the new rules.
The VASP that issued the license must also comply with the MVP licensing terms. At the moment, VARA has yet to publish how to go through all the stages of licensing, but there are requirements for a business project.
The VARA Regulation states that in case of non-compliance with the company’s financial activities requirements, fines of up to 50 million dirhams (or 13.6 million USD) may be imposed.
Navigating the era of transition and innovation, VARA’s licensing approach encompasses the first and second phases for companies. Completion of all four permit stages mandates adherence to novel protocols. The licensing VASP must align with MVP terms. Although the comprehensive licensing process details are pending, VARA stipulates project prerequisites.
Requirements for Crypto Companies
All crypto companies must comply with specific rules that apply to changes in business, capital, organizational structure, and management activities.
Licensing is the responsibility of two authorized persons with cryptocurrency business experience. In addition, these persons must be residents of the Emirates or have a UAE passport. The company’s management and leading managers must also be residents of the Emirates or have UAE passports.
We list the areas subject to control and verification for licensing:
- observance of general rules;
- availability of trained employees;
- accounting and auditing;
- risk assessment;
- control system;
- implementation of AML and KYC policies.
All these aspects will be carefully checked, and if inconsistencies are found, the company will put forward requirements for their elimination. Otherwise case, a license cannot be issued.
Given the strict, comprehensive control, this jurisdiction is considered one of the most reliable and promising for a crypto company.