The Virtual Asset Regulatory Authority (VARA), the regulatory authority of virtual assets within Dubai, desires to see Dubai in a leading position as a regional and international hub for virtual services and related activities.
VARA published a report on February 7, 2023, which includes guidelines to regulate, oversee and supervise the Emirates’ virtual assets and virtual asset service providers (VASP) in all zones of Dubai, excluding the Dubai International Financial Centre.
According to VARA, Virtual asset service providers (VASP) have to obey VARA’s four Compulsory Rulebooks and seven Activity-Specific Rulebooks to meet VARA’s licensing requirements. The four Compulsory Rulebooks cover certain rules on the Company, Compliance & Risk Management, Technology & Information, and Market Conduct.
Dubai’s regulatory agency mentioned its basic fundamental principles to monitor in a better way. The five major corners on which the agency is working are-
- Market integrity & stability,
- Consumer Protection,
- Technology neutrality & support of innovation,
- Regulatory resilience and
- Regulatory efficiency & proportionality
VARA’s regulatory guidelines cover regulations on the following points as follows:
- Anti-Money Laundering and Combating the Financing of Terrorism
- Marketing, Advertising and Promotion
- Supervision, Examination and Enforcement
- Supervision and Authorization Fees
- Virtual Asset Activities
(Advisory Services, “Broker-Dealer Services, “Lending and Borrowing Services, Exchange Services, Payments and Remittances Services and VA Management and Investment Services)
VARA has mentioned various fines related to the violation of different rules respectively. If VASPs break the rules related to the regulations and directives related to the market offense and the Compulsory Rulebook except for the Company Rulebook, then VASPs have to pay back the generated profit, and the losses can be avoided. There are other fines as per the nature of violations.
Additionally, if any violation of other rulebooks is encountered, violators will be charged “200% of the profits gained or losses avoided,” and other fines will be included.
Irina Heaver, a crypto and blockchain lawyer resident in the United Arab Emirates, spoke with one of the local news media outlet and discussed VARA’s various fines and clarity in the crypto industry. She added, “Regulatory certainty is very good for business. It is good for consumers, investors and the Emirate of Dubai. The regulations are long-awaited and mostly welcomed.”
Additionally, Heaver said, “Repeated offenders get a 500,000 AED fine per offense.”
These are all efforts made by Dubai’s virtual regulating authority to position Dubai on regional and international levels. VARA’s objective behind these strict regulations is to attract investments, generate awareness of virtual asset services & products and encourage innovations.
However, in this way, the security of the virtual assets will be increased, and the functions of the virtual asset service provider will be disciplined. The regulations and guidelines have provided full clarity on where market participants must take off. It is best practice to handle or control any future turbulence.