The Virtual Asset Regulatory Authority (VARA) in Dubai has taken the lead in regulating the cryptocurrency industry by issuing comprehensive guidelines for virtual asset service providers (VASPs) operating within the emirate. Irina Heaver, a crypto and blockchain lawyer based in the United Arab Emirates, reported that the VARA has released the “Full Market Product Regulations,” which include four compulsory rulebooks and activity-specific rulebooks that set the rules for operating VASPs. The regulations apply to market participants within Dubai, with the exception of those operating under the Dubai International Financial Centre (DIFC), which has its own regulator.
The new guidelines cover a wide range of important topics in the cryptocurrency industry, including marketing, advertising, and promotions. All market participants, whether licensed by VARA or not, are required to adhere to the regulations, and violators will face hefty fines, ranging from $5,500 (20,000 UAE dirhams) to $55,000 (200,000 dirhams). Repeat offenders could be fined up to $135,000 (500,000 dirhams). The regulation sets fees for advisory services, licensing, and annual supervision for custody, exchanges, broker-dealers, and lending services, which can range from $11,000 (40,000 dirhams) to $55,000 (200,000 dirhams) depending on the services provided.
In addition to these regulations, VARA also provides guidance on other important matters such as the issuance of virtual assets. According to Heaver, the new guidelines have several key takeaways, including the prohibition of privacy coins in Dubai and the requirement for traders with trading capital above $250 million to register with VARA. This requirement provides VARA with the necessary information to oversee and regulate the industry, ensuring that all participants adhere to the guidelines and regulations.
The new guidelines from VARA are a significant step forward for the cryptocurrency industry in Dubai and are largely seen as a positive development. Heaver commented that “regulatory certainty is very good for business, it is good for consumers, investors, and for the Emirate of Dubai.” She added that although VARA has a wide authority to interpret the regulations and apply them as they see fit, she believes that such interpretation and application will be done in line with “the spirit of Dubai’s leadership,” which prioritizes fostering business and entrepreneurship.
In conclusion, the comprehensive guidelines issued by VARA demonstrate Dubai’s commitment to promoting and regulating the cryptocurrency industry, while also providing a secure and transparent environment for businesses, consumers, and investors. By setting clear guidelines, VARA is providing clarity and certainty for the industry, which is essential for its growth and success. The new regulations are a positive step forward for the industry and are a testament to Dubai’s leadership in fostering innovation and entrepreneurship.