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A Complete Guide to the Dubai VARA License Application Process

A Complete Guide to the Dubai VARA License Application Process

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The UAE is a global leader in developing virtual assets, supporting a thriving market for digital currencies. The Dubai Virtual Assets Regulatory Authority (VARA), which supervises and controls a range of virtual asset operations within the Emirate, is crucial to this. This comprehensive book explores the intricacies of acquiring Dubai VARA License and their wide array of activities, offering discernment into the requisite authorizations for participating in the thriving virtual asset ecosystem in the United Arab Emirates.

Understanding of Virtual Assets (VA)

A virtual asset is defined as a digital representation of value that can be exchanged, transmitted, or utilized digitally as a means of payment or exchange, or for investment reasons, under Article 2 of Law No. (4) of 2022, which governs virtual assets in Dubai. Virtual Tokens and any other value-based digital representations as defined by VARA fall under this category.

The Dubai VARA License role

In March 2022, VARA was founded after the Virtual Asset Law went into effect. It is the official body in charge of managing Virtual Assets and associated operations within the Emirate of Dubai’s several zones. Except for the Dubai International Financial Center, Special Development Zones and Free Zones are included in this jurisdiction.

Dubai VARA License  Requirements for Virtual Asset Activities

The following prerequisites are outlined in Article 15 of the Virtual Asset Law to participate in virtual asset operations inside the Emirate:

Permit Requirement: Without first securing a permit from VARA, no person or organization is permitted to engage in virtual asset activities within the Emirate.

Compliance with Law: The Director General has authorized that the permission be issued by all applicable laws, rules, and procedures.

Firm Establishment: To engage in virtual asset activities, an entity must create a firm within the Emirate and choose a legal structure approved by Dubai’s relevant commercial licensing body.

Activities in the Free Zones: Before starting the licensing procedure with the appropriate commercial licensing body, anyone planning to conduct business in any of the free zones must get the required authorizations and permissions from VARA.

Compliance with Regulations: Every action involving virtual assets must be carried out in line with the specifications, guidelines, and directives provided in the VARA-issued permit.

Activities Under VARA Regulation: License Conditions

Article 16 of the Virtual Asset Law states that the following actions in Dubai need a permit from VARA:

Platform Management and Operation for Virtual Assets:

involves managing and operating a platform that makes trading virtual assets easier. Websites, mobile apps, and other electronic tools might be examples of this.

Services for exchanging virtual assets and currencies:

includes services that allow virtual assets to be exchanged for different currencies, both foreign and domestic.

Services for the Exchange of One or More Virtual Asset Types:

includes services that make it easier to trade one kind of virtual asset for another, like exchanging Bitcoin for Ethereum.

Services for Virtual Asset Transfer:

Refers to services that make it possible to move virtual assets across wallets, such as Bitcoin

Services for Keeping and Managing Virtual Assets:

involves providing management and custody services for digital assets, such as keeping Bitcoin for customers.

Services Associated with the Virtual Asset Portfolio:

Includes advice on the structure and allocation of a client’s virtual asset holdings, among other services associated with managing a virtual asset portfolio

Dubai’s VARA License Application Process

To apply for a VARA (Virtual Asset and Related Activities) License, new businesses in Dubai (apart from the DIFC) have to go through two steps:

Step 1: Submitting an Initial Disclosure Questionnaire (IDQ) for Initial Approval

Companies wishing to engage in virtual asset activities must first submit an Initial Disclosure Questionnaire (IDQ) to the applicable Free Zone Authority or Dubai Economy & Tourism.

Further paperwork is needed, such as a business strategy and information about the top management and beneficial owners of the company.

First Charges and Authorization:

The organization obtains Initial Approval upon payment of the initial payments, which are normally 50% of the license application amount.

With this clearance, the company can move forward with its official incorporation and finish setting up its operations, including hiring staff and leasing office space.

The company is currently not allowed to engage in virtual asset activities.

If the firm’s planned actions are outside the purview of the regulations or do not adhere to the necessary criteria, VARA maintains the power to refuse Initial Approval.

Step 2: Submitting Documentation for a VASP License Application:

The company may apply for a VASP (Virtual Asset Service Provider) License following Initial Approval.

As per VARA’s rules, the application must include comprehensive documentation.

VARA’s comments, which may include meetings, interviews, and requests for more paperwork, may be involved in the submission process.

Final Charges and Monitoring:

The remaining sum for the application license and the first year’s supervision fees must be paid by the firm.

The company will receive a VASP License, allowing it to carry out virtual asset activities, after meeting all conditions.

Unlock the future of digital finance in the UAE by diving into the intricate world of Virtual Asset Service Provider (VASP) licensing. The Dubai Virtual Assets Regulatory Authority (VARA) stands as the beacon guiding this dynamic landscape, ensuring robust regulatory oversight and fostering innovation. Whether you are a burgeoning startup or an established enterprise, this comprehensive guide demystifies the process of obtaining a VARA license, offering you the knowledge to navigate the regulatory waters and thrive in Dubai’s bustling virtual asset market.

Don’t miss the opportunity to be at the forefront of the virtual asset revolution in Dubai. Equip yourself with the insights and steps needed to secure your VARA license and take full advantage of the Emirate’s supportive regulatory framework. Explore our detailed guide to understand the prerequisites, application process, and compliance requirements, and embark on your journey to becoming a recognized player in the digital currency arena. Seize this moment to innovate and lead in the ever-evolving virtual asset ecosystem of Dubai!

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