How to Get a VARA License in Dubai for Crypto and Virtual Asset Businesses

Dubai has rapidly emerged as a global hub for cryptocurrency and virtual asset businesses, attracting investors, entrepreneurs, and tech enthusiasts. The city’s robust infrastructure, progressive regulatory framework, and welcoming business environment make it an attractive destination for those looking to launch blockchain startups, crypto exchanges, and NFT projects. At the heart of this ecosystem lies the Virtual Assets Regulatory Authority (VARA), established under the Dubai Virtual Assets Law (Law No. 4 of 2022). This article will guide you through everything you need to know about obtaining a VARA license to operate in the virtual assets space in Dubai.

What is a VARA License?

A VARA license is the official permit granted to businesses involved in virtual assets (such as cryptocurrencies, tokens, and blockchain services) within the Emirate of Dubai. It is essential for businesses wishing to engage in activities like crypto trading, wallet services, and blockchain-related ventures. The license ensures that these businesses operate securely and follow all compliance regulations set by the Dubai government.

Also Read:  Crypto License in Dubai

Who Issues the VARA License?

The VARA license is issued by the Virtual Assets Regulatory Authority (VARA), a regulatory body established under Dubai's Virtual Assets Law. VARA oversees all virtual asset activities in Dubai, excluding the Dubai International Financial Centre (DIFC), which has its own set of regulations. VARA is the world’s first dedicated virtual asset regulator, positioning Dubai as a global leader in the regulation and governance of digital finance.

Why is the VARA License Important?

Obtaining a VARA license is mandatory for businesses involved in the virtual assets space in Dubai. The license helps ensure that companies adhere to high standards of safety, security, and regulatory compliance. It is required for businesses offering services such as:

• Crypto Exchange Platforms: Facilitating the trading of cryptocurrencies.
• Portfolio Management: Managing virtual asset portfolios on behalf of clients.
• Custody Services: Providing secure storage and custody solutions for digital assets.
• Advisory Services: Offering professional advice on virtual asset investments.

Also Read:  VAT Exemptions on Virtual Assets and Cryptocurrencies

Who Needs a VARA License in Dubai?

Any business or individual involved in the following virtual asset activities in Dubai must obtain a VARA license:

• Exchange Services: Platforms that match buy and sell orders for virtual assets.
• Broker-Dealer Services: Acting as intermediaries for buying/selling virtual assets.
• Custody Services: Safekeeping and securely managing clients’ virtual assets.
• Management & Investment Services: Managing or investing clients' virtual assets.
• Lending & Borrowing Services: Facilitating lending and borrowing of digital assets.
• Transfer & Settlement Services: Enabling the transfer or settlement of virtual assets.
• Advisory Services: Providing advice or recommendations related to virtual asset transactions.
• Virtual Asset Issuance: Issuing stablecoins or other Fiat-Referenced Virtual Assets (FRVAs).

Types of VARA Licenses

There are various types of VARA licenses, depending on the services your business provides. Here’s a breakdown:

Advisory Services License

This license is for companies that provide consultancy services related to virtual assets. This includes portfolio recommendations, risk assessments, and investment strategies in the crypto space.

Broker-Dealer License  

This is for businesses facilitating the buying, selling, or trading of virtual assets on behalf of clients. Crypto exchanges, brokerage firms, and trading platforms fall under this category.

Custody Services License

Custody services involve the safe storage and management of digital assets. This license is for firms that provide these services, ensuring robust security and compliance with VARA regulations.

Exchange Services License

Businesses that operate crypto exchanges or platforms for trading virtual assets need this license. It ensures that these exchanges comply with VARA’s anti-money laundering (AML) and transaction monitoring guidelines.

Lending and Borrowing Services License

Companies offering crypto lending or borrowing services, including yield-generation activities, must obtain this license.

Transfer and Settlement Services License

For businesses involved in facilitating the transfer, payment, or settlement of virtual assets, such as blockchain-based remittance platforms and payment service providers.

Note: Depending on your business activities, you may need multiple licenses. For example, a crypto exchange providing custody and advisory services would require more than one license.

Eligibility Criteria for a VARA License

Before applying for a VARA license, businesses must meet certain eligibility requirements:

• Legal Presence in Dubai: You must have a registered business entity in Dubai. This can be on the mainland or in one of the approved free zones, such as DMCC, DIFC, or DWTC.
• Qualified Management and Key Personnel: All directors and senior management must meet VARA’s “fit and proper” criteria, which includes relevant experience, a clean track record, and financial integrity.
• AML and CFT Compliance: Your business must have systems in place to comply with Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) laws. This includes submitting a comprehensive internal compliance policy.
• Cybersecurity and Data Protection: Given the digital nature of virtual assets, VARA requires businesses to have robust cybersecurity measures to prevent hacking, fraud, and unauthorized access to customer funds.
• Minimum Paid-Up Capital: Certain license types require a minimum paid-up capital. For instance, Advisory Services may require AED 100,000, while Exchange Services may require a higher amount, depending on the scale of operations.
• Reserve Assets: For activities like Custody Services, the business must maintain 100% of the value of client liabilities and ensure that client funds are fully segregated.
• Risk Management: A clear risk management framework must be in place to identify, measure, and manage the risks associated with virtual asset activities.

Step-by-Step Process to Get a VARA License in Dubai

Here’s a detailed breakdown of the steps to obtain your VARA license:

Step 1: Choose Your Business Activity and Jurisdiction

First, decide on the type of virtual asset activities your business will engage in, such as exchange, custody, or advisory services. Choose a jurisdiction in Dubai that is approved by VARA (e.g., DMCC, DIFC).

Step 2: Register Your Company

Once you have selected your jurisdiction, proceed with company registration. This includes selecting a trade name, preparing necessary documents, and obtaining a trade license from the relevant authority.

Step 3: Receive Approval to Incorporate (ATI)

After registering your company, you will receive an Approval to Incorporate (ATI), allowing you to begin the formal legal incorporation process, including setting up your office space and opening corporate bank accounts.

Step 4: Prepare and Submit Required Documents

Submit the necessary documents, including:

• Business plan
• AML/CFT compliance policies
• Cybersecurity and risk management frameworks
• Financial projections and proof of funds
• Details of shareholders and key personnel

Step 5: VARA Review and Due Diligence

VARA will conduct a thorough review of your application. This may involve background checks, document clarifications, or additional requests for information.

Step 6: Obtain Final VARA License

Upon completing the review and paying the final regulatory fees, you’ll receive your VARA license, enabling you to legally operate your virtual asset business in Dubai.

VARA License Cost in Dubai

The cost of obtaining a VARA license depends on the type of business you are starting:

• Advisory or Transfer/Settlement Services: AED 40,000 (application fee), AED 80,000 per year (annual supervision fee).
• Brokerage, Exchange, Custody, Management, or Lending Services: AED 100,000 (application fee), AED 200,000 per year (annual supervision fee).

Other Costs to Consider:

• Compliance and Legal Setup: Creating AML/KYC frameworks, cybersecurity systems, and risk management policies can cost between AED 500,000–600,000.
• Company Registration Fees: Fees for issuing trade licenses, reserving names, and registering with local authorities.
• Office Space and Staffing: Costs for physical office space and hiring local compliance officers.
• Audit and Reporting Costs: Ongoing audits and regulatory reporting fees.

Conclusion

The VARA license is a critical step for anyone looking to enter the rapidly expanding crypto and virtual asset market in Dubai. By following the steps outlined in this guide and ensuring compliance with all regulatory requirements, you can set up a successful business in one of the world’s most innovative and business-friendly environments. Reach out to Filings.AE for professional support in obtaining your VARA license today!

How Filings.AE Can Help You Obtain a VARA License

Partnering with Filings.AE  can make the VARA licensing process smoother and faster. Filings.AE offers expert guidance in navigating the licensing requirements, preparing the necessary documents, and ensuring compliance with AML/CFT regulations. From application submission to post-licensing support, Filings.AE provides a comprehensive service to help you successfully launch your virtual asset business in Dubai.

Get started!