Dubai Announces Regulations for Virtual Assets

VARA Regulations even for marketing and promotions

VARA

The Dubai Virtual Assets Regulatory Authority (VARA) was established by Law No. [4] of 2022 Regulating Virtual Assets in the Emirate of Dubai (Dubai Virtual Asset Law).

VARA is in charge of regulating, supervising, and overseeing Virtual Assets and Virtual Asset Service Providers (VASPs) conducting authorized Virtual Asset activities in the Emirate of Dubai.

The Dubai Virtual Asset Law applies to virtual assets in all zones across the Emirate of Dubai, including Special Development Zones and Free Zones, but excluding the Dubai International Financial Centre (DIFC).

In February 2023, the Virtual Assets and Related Activities Regulations 2023 have been enacted.

VASPs who fulfill VARA's licensing requirements must comply with 4 compulsory Rulebooks:

• Company Rulebook

• Compliance & Risk Management Rulebook

• Technology & Information Rulebook

• Market Conduct Rulebook

7 activity-specific Rulebooks have been developed to cover risks associated with the provision of each Virtual Asset activity.

A VASP must comply with an activity Rulebook if they are licensed to offer the activity.

• Advisory Services Rulebook

• Broker-Dealer Services Rulebook

• Custody Services Rulebook

• Exchange Services Rulebook

• Lending & Borrowing Services Rulebook

• Payments & Remittances Services Rulebook

• Management & Investment Services Rulebook

The rules only apply to market participants within Dubai, excluding those operating under the Dubai International Financial Centre (DIFC), a free zone with its own regulator.

The Dubai regulator also highlighted that all market participants, whether they are licensed by VARA or not, must adhere to regulations for marketing, advertising and promotions regulations.

Violators will be fined between 20,000 dirhams ($5,500) and 200,000 dirhams ($55,000), and repeat offenders could see fines as high as 500,000 dirhams ($135,000).

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