Dubai’s Virtual Asset Regulatory Authority issues regulations for 2023

Dubai’s Virtual Asset Regulatory Authority (VARA) has issued its latest Virtual Assets and Related Activities Regulations.

The regulations showcase an all-encompassing virtual asset (VA) framework centred on economic sustainability and cross-border financial security.

The VA framework is designed to offer regulatory certainty and it also mandates gold-standard risk assurance and anti-money laundering (AML) standards to be applied by licensed entities in Dubai.

As the authority mandated to provide VA oversight across Dubai [except DIFC], VARA facilitates VA-associated economic stability, investor protection, and jurisdictional resilience.

Mandate to support ‘future economy’

Helal Saeed Almarri, director general Dubai’s Department of Economy & Tourism, and chairman of VARA’s Executive Board said: “Dubai’s D33 Economic Plan has outlined our mission to establish the emirate as the capital of the future economy anchored by metaverse, AI, Web3.0 and blockchain.

In Q1 2022, VARA was launched as the world’s only independent and specialist regulator for VA to serve as the accelerator for a truly borderless digital economy. Ahead of its first anniversary since its establishment, VARA launches the first-of-its-kind VA framework structured to accelerate our new economy agenda, augmenting secure, and sustainable ‘global’ market growth. This custom-designed construct reflects UAE’s commitment to building responsible safeguards, and Dubai’s confidence in delivering a progressive VA ecosystem that nurtures next-gen innovation.”

Read: Dubai wants metaverse to contribute $4bn to its economy by 2030

Scope of VARA regulations

The new regulations span a comprehensive range of seven licensed VA activities: Advisory services, Broker-Dealer services, Custodial services, Exchange services, Lending-Borrowing services, Payments and Remittances services, and VA Management and Investment services.

Additionally, issuance is a regulated activity under the VARA regime, allowing consumers to make a more informed decision on new tokens being launched in Dubai, and the associated obligations of the issuer.

Existing MVP operational licence applicants, holders of either provisional or preparatory MVP licenses, legacy UAE-based virtual asset service-providers (VASPs), and new market entrants will be provided the route to full FMP licensing.

All VASPs offering VA services to the Dubai market prior to the publication of the FMP regulations will be required to register with VARA and become fully compliant with the final rules.

Any breach of this condition will be subject to regulatory action, said VARA.