The UAE is one of the first countries to establish a dedicated regulator for virtual assets, providing legal clarity, investor protection, and regulatory innovation in a rapidly evolving industry. Dubai has rapidly become a global hub for virtual assets and blockchain innovation and at the center of this ecosystem is the Virtual Assets Regulatory Authority (VARA).
What Is VARA?
Established under Law No. (4) of 2022 Regulating Virtual Assets in the Emirate of Dubai (Dubai VA Law), VARA is the regulatory authority responsible for overseeing Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs) in Dubai (excluding the DIFC, a separate financial free zone in Dubai, that is regulated by the Dubai Financial Services Authority (DFSA)). Its mandate is to provide a clear, progressive framework to govern and enable the responsible growth of the virtual asset economy. As part of its strategic goals, VARA aims to position Dubai as a global hub for virtual assets, promote innovation and investment, and ensure strong regulatory protections for market participants.
What Is a VASP Licence?
Any firm seeking to carry on Virtual Asset activities in or from Dubai (excluding DIFC) has a legal obligation to be licensed by VARA prior to commencing operations. This includes businesses involved in:
- Virtual Asset Platform operation and management services.
- Exchange between Virtual Assets and national or foreign currencies.
- Services for the exchange between one or more forms of Virtual Assets.
- Virtual Asset transfer services.
- Virtual Asset safekeeping, management, or control services.
- Services related to Virtual Asset Wallets.
- Services related to offering, and trading in, Virtual Tokens.
No person may carry out these activities without obtaining a permit from VARA, issued according to applicable legislation and procedures. Businesses must be legally established in Dubai, in an approved legal form, and must secure VARA’s approvals before proceeding with commercial licensing. All activities must comply with the requirements and regulations specified in the permit.
Key Steps to Obtain a VARA VASP Licence
Applying for a VASP Licence is completed in two stages: First, application for an Approval to Incorporate (“ATI”) to establish a legal entity and to commence operational setup, then an application for VASP Licence.
Step 1: Initial Disclosure and Business Setup
- Submit the Initial Disclosure Questionnaire (IDQ) to Dubai Economy & Tourism (DET) or the relevant Free Zone authority.
- Provide required documents, including your business plan and details of beneficial owners and senior management.
- Pay initial fees (usually 50% of the licence application fee).
- Receive Approval to Incorporate (ATI), allowing you to complete your company’s legal incorporation and operational setup (office, employees, etc.).
Note: At this stage, your firm is not permitted to conduct virtual asset activities. VARA may withhold ATI if your business falls outside the regulatory scope or does not meet standards.
Step 2: Full VASP Licence Application
To apply for a Category 5 license, businesses must meet specific regulatory and operational requirements set by the SCA
- After obtaining ATI, prepare and submit your full VASP licence application to VARA with the necessary documentation as guided.
- Engage with VARA during their review process, which may involve meetings, interviews, and additional document requests.
- Pay the remaining licence fees and the first year’s supervision fees.
- Upon successful review, receive your VASP Licence, which may include operational conditions to comply with.
Once you’ve obtained your VARA licence, your firm must operate strictly within the scope of the approved permit. Ongoing compliance with VARA’s regulatory framework including reporting, disclosures, and supervision requirements is mandatory to maintain your licence in good standing.
Paid-Up Capital Requirements Under VARA
To ensure financial stability, operational resilience, and protection to clients, ensuring the long-term integrity of Dubai’s virtual assets ecosystem, Virtual Asset Service Providers (VASPs) licensed by VARA are required to maintain specific levels of Paid-Up Capital. These requirements vary depending on the type of virtual asset activity a firm undertakes ranging from AED 100,000 for advisory services to up to AED 1.5 million for exchange services. In some cases, the capital threshold is calculated as a percentage of the VASP’s fixed annual overheads, whichever is higher.
If a VASP is licensed for multiple activities, it must maintain separate Paid-Up Capital for each, based on the overheads specific to that activity. All Paid-Up Capital must be reconciled monthly and held in a secure manner, such as a UAE bank trust account naming VARA as the beneficiary, a surety bond, or another method approved by VARA.
How FiveComply Can Help:
FiveComply can help you navigate the full licensing lifecycle, —from application to approval— and support your business with ongoing compliance and regulatory guidance, ensuring you remain fully aligned with VARA’s expectations and Dubai’s regulatory standards.
We can assist you with:
- Business Setup & Documentation: Supporting Free Zone incorporation, preparing required documents, and guiding you through the entire application process.
- VASP Licensing Strategy: Structuring your application and compliance approach to align with VARA’s detailed licensing requirements.
- Ongoing Regulatory Support: Providing continued assistance with compliance obligations, VARA communications, and evolving reporting requirements.
Book a consultation with our team today for actionable guidance and a streamlined path to securing your VASP licence in the UAE.