The Dubai Virtual Asset Regulation Law

published on 8 April 2022 | reading time approx. 2 minutes

The Dubai Virtual Asset Regulation Law has been introduced next to the establishment of a regulatory authority, the Dubai Virtual Asset and Services Authority (VARA).

On 9 March 2022, Dubai introduced the Virtual Asset Regulation Law and announced the establishment of the Dubai Virtual Asset and Services Authority (VARA). The law aims to create a progressive legal framework to protect investors and to draft much-warranted international standards for the governance of the virtual asset industry that will promote responsible business growth under prudential conditions. The law defines the duties and responsibilities of VARA. It also states that the VARA is charged with organising and establishing the rules and controls that govern the conduct of VA activities, including administrative services, clearing and settlement services, and the classification and specification of types of virtual assets.

The VARA will be responsible for these regulations, for the admission process and for the governance of virtual assets on the Mainland and in the Dubai Free Zones (excluding the DIFC).

VARA will also be responsible for the following tasks:

Organising issuing and trading of virtual assets and virtual tokens
Organising and authorising virtual asset service providers
Ensuring the highest standards of personal data protection for beneficiaries
Organising the operation of VA platforms and portfolios
Monitoring transactions and preventing VA price manipulation.

Under the law, any person in the emirate is prohibited from operating without a VARA permit. Anyone wishing to carry out any of the VA activities must establish a presence in Dubai to conduct business.

Activities subject to VARA authorisation are:

Operation and management of virtual asset platforms
Exchange services between virtual assets and currencies, whether they are domestic or foreign currencies
Exchange services between one or more forms of virtual assets
Virtual asset transfer services
Custody and management services for virtual assets
Services related to the portfolio of virtual assets
Services related to the offering and trading of virtual tokens

Compliance requirement

Acts constituting a breach of the provisions of this Act and related resolutions and the monetary penalties to be imposed on a contravener shall be determined by a resolution of the Board of Directors of the Dubai World Trade Centre.

VARA may take additional action in the event of any contravention:

Suspension of the permit for a period not exceeding six months
Withdrawal of the permit
Coordination with the relevant trade licensing authority in the emirate to revoke the trade licence.