The Virtual Assets Regulatory Authority (VARA) is leading the way in releasing comprehensive crypto assets regulations to promote crypto-related activities in Dubai. Established in March 2022, VARA aims to position the emirate as a regional and international hub for virtual assets and related services.
In February, VARA released a comprehensive regulatory framework for virtual asset service providers (VASPs), including four compulsory rulebooks and activity-specific rulebooks. These rules will govern VASPs operating within the Dubai region only. The VARA framework also includes a rulebook for marketing, advertising, and promotions by VASPs.
Deepa Raja Carbon, managing director and vice chair at VARA, explained that the organization’s unique proposition lies in its agility, collaborative ethos, and ability to respond swiftly to market needs. She described VARA’s approach as seeking to “find the highest point of convergence as a universal threshold rather than a minimum standard baseline,” which ultimately elevates and scales the entire ecosystem.
“VARA is setting a precedent for how regulators can work in cohort with the market, dynamically adjusting to its pulse to sculpt a regulatory environment that is robust, resilient and responsive: the 3R-Pyramid. It is this combination of speed, collaboration and unwavering dedication to quality that defines our progress and, we believe, will help usher in a new era of borderless economic opportunity with traceable, hence minimized, cross-border risks.”
When asked about the key challenges faced by VARA in establishing these virtual asset frameworks, Carbon noted that crafting guidelines for a nascent industry like virtual assets is undeniably challenging. She emphasized that VARA rigorously analyzed existing frameworks and observed the learning curves of other regulatory bodies.
Carbon also mentioned that VARA followed a consultative and collaborative approach by engaging with various stakeholders, including industry leaders, innovators, peer regulators, legislators, and the general public. She highlighted VARA’s effort to ensure that their guidelines resonate with the needs and realities of the market.
VARA’s crypto regulations aim to position Dubai as one of the industry’s hot spots, as more countries in the Middle East and Asia look to attract digital asset businesses. Hong Kong has also made big strides in crypto regulation, setting up various regulatory guidelines for crypto platforms catering to retail and institutional clients in 2023.