Dubai has been leading the charts in adopting modern technology, cutting-edge financial innovation, and the latest advancements. Dubai remains committed to the goal of becoming the global hub of the world and thus, they have actively been accepting virtual assets and blockchain technologies.
The government of Dubai has been very active in establishing the Virtual Assets Regulatory Authority VARA. It is a regulatory body in Dubai that is specially designed to regulate, license, and oversee virtual assets. They assist the service providers and also offer a well-structured framework to businesses, investors, and others.
Dubai is keenly working on developing its digital economy and thus, has been active in making efforts to achieve the objective. Establishing the Virtual Assets Regulatory Authority (VARA) is the key example of it. Local lawyers in UAE can also help you to understand the law and new rules.
What is the Virtual Assets Regulatory Authority VARA?
Nonetheless, the regulatory body plays a central role. They are responsible for maintaining transparency and preventing financial crimes in the UAE. They also play a pivotal role in fostering sustainable growth in the digital economy. They mainly support the virtual asset sector of Dubai and also provide comprehensive guidelines over licensing, legal framework, and procedure. VARA provides in-depth guidance regarding the application, legal procedure, compliance obligations, and the role of legal professionals in Dubai.
Understanding the Key Role of VARA
Virtual Assets Regulatory Authority VARA was officially formulated under Dubai Law. It was established under Dubai law No. 4 of 2022 that operates within the jurisdiction of the Dubai World Trade Centre Authority. VARA is mainly responsible for regulating and overseeing all kinds of activities related to virtual assets within the emirate. However, it excludes the DIFC Dubai International Financial Centre.
It is mainly responsible for issuing licensing and giving permits to virtual assets activities. Therefore, they supervise the legal compliance with the laws, provisions, and regulatory standards. They are allowed to impose penalties in case of any violations. They also provide secure and safer financial innovation in Dubai.
Different Types of Licenses Issued by VARA
Entities and businesses who are directly involved in virtual assets activities need to obtain licensing. There are various kinds of license categories available in Dubai. It normally depends upon the business model. Advisory services provide useful guidance over virtual assets investments. It also handles the risks related to virtual assets.
Another type is broker-dealer service. It facilitates the seller and buyer of virtual assets in Dubai on behalf of their clients. Thirdly, custody services are often available for safeguarding virtual assets for the clients. It helps in securing wallets.
Fourthly, Exchange Services mainly offer services regarding the operating trading platforms for virtual assets. Lending and Borrowing Services are also readily available for providing financial instruments. It also deals with lending services that involve virtual assets. Last but not the least, Management and Investment Services is another type that manages portfolios of virtual assets on behalf of clients.
Every type of license differs from each other. Every license is peculiar and has distinct operational requirements. Besides, they also have unique documentation specifications that an applicant needs to meet before getting approval.
Main Specifications and Compliance Requirements
It is essential to have legal integrity and safeguard the investors. VARA strictly made it compulsory to comply with the standards. The standards are mentioned below:
It requires the establishment of a local entity. The entity should have an operational and physical office inside Dubai. Besides, the details about the business plan must be disclosed. A comprehensive risk management plan must be shared according to the legal framework and regulatory standards.
Additionally, it is important to implement Anti-Money Laundering (AML) and Know Your Customer (KYC) policies. Furthermore, regular financial audits are also required. Cyber security assessments are also conducted.
A transparent ownership and governance structure is needed. The measures are made to prevent the misuse of virtual assets. Besides, it also prevents illicit purposes and activities in a virtual landscape.
This measure supports aligning operations with the best international practices and compliance standards.
The licensing procedure of VARA:
It is mandatory to secure a VARA license. To obtain licensing a multi-step procedure is mandatory to follow. It begins with application engagement. The prospective applicants should first consult with the VARA. They will communicate and discuss the eligibility and process.
Secondly, the formal Submission of the application will take place. The applicant will file for the application by providing a lucrative business plan, financial statements, risk management plans, and compliance programs.
Thirdly, VARA will be directly involved in the Due Diligence process. The authority will thoroughly review the application along with the operations, structure, and financial soundness.
Fourthly, conditional approval is issued to the applicant once they are satisfied with the initial criteria. They will also conduct the risk assessment.
Lastly, the license will be granted once all the operational and compliance checks are met. Lawyers in Dubai and law firms in Dubai will assist with the process.
They work rigorously to navigate through the legal complexities. The Attorneys in Dubai often help with application preparation and also with regulatory compliance.
The role of lawyers
Law firms in Dubai often have a team of lawyers and attorneys in Dubai who assist in avoiding the penalties.
In case of non-compliance, one may face harsh fines, punitive measures, and even suspension of licensing. Therefore, lawyers in Dubai will assist in preventing regulatory violations.
This can severely sabotage a business’s reputation and goodwill. They will mitigate the risk by offering valuable legal advice to clients over proper governance and legal procedures.
They often play an instrumental role in ensuring full legal adherence to regulatory standards.