Looking at the continuous shortfalls which lead to market manipulation, unlawful disclosure, and insider dealings by the top crypto companies and considering several parameters that are aligned with the interests of investors & organizations, VARA has introduced a set of regulatory guidelines for the crypto ecosystem. Through these guidelines, VARA aims to mitigate risk & facilitate cross-border innovation and operations to support the market adoption of cryptocurrencies.
VARA’s Regulatory Framework
Dubai confirms its position as a well-regulated, crypto-friendly jurisdiction with the establishment of the Virtual Assets Regulatory Authority (VARA) as the central authority for the global Virtual Asset industry. With this move, Dubai is all set to become a realm of crypto and web3 businesses.
VARA has become the world’s first independent regulator for virtual assets and related services to invite industry leaders to the region. With the aim to promote Virtual Assets and attract investment, the Emirates of Dubai is set to be positioned as a regional and international hub for Virtual Assets and related services by developing a digital economy in the city.
As per the latest circular released by VARA on the 7th of February 2023, the regulatory body has not yet granted anyone a full market product (FMP) license to date and will only initiate to grant the FMP license when and after the regulations have been tested within the regime.
VARA has introduced a four-step licensing procedure to evaluate the stability and strength of the crypto businesses before finally granting the (FMP) license. The four stages of licencing include 1. Provisional permit 2. Preparatory Licence 3. Minimum Viable Product Licence and 4. Full Market Product Licence. As per the circular by VARA, the projects are only at two stages of licencing to date that is either on 1. Provisional stage or 2. Minimum Viable Product.
In addition to the licenses, VARA has also introduced a set of 4 rulebooks that all VASPs shall comply with. Other than this, there are 7-activity-specific rulebooks that the service providers would have to comply with as per their niche of activity.
How can it benefit the crypto industry?
As an international hub for Virtual Assets and related services, Dubai aims to become the web3 leader. VARA being the sole regulatory body in Dubai for the virtual assets domain aims to safeguard the retail and individual interests against any sort of market manipulations, or misconduct of information, and empower investors to participate in this emerging economy. Conclusively, the regulations would play a pivotal role in promoting the economy of digital assets, and attract investments and startups to set up their businesses in the Emirate of Dubai.
