How to get an approved VARA license in Dubai

Virtual assets, including cryptocurrencies like Bitcoin, Ethereum, and Ripple are gaining momentum as means of payment. They are largely popular in the United Arab Emirates, where a good number of the residents engage in trading-related activities. The government has since put measures in place to coordinate the activities fairly and inclusively.

Introducing the VARA License: what is it?

A VARA (Virtual Assets Regulatory Authority) license in Dubai is an official authorization issued by the Virtual Assets Regulatory Authority (VARA), the governing body responsible for overseeing and regulating virtual asset-related activities in the emirate. This license allows businesses to legally operate within Dubai’s virtual asset ecosystem, ensuring compliance with established regulatory frameworks.

The VARA license is specifically designed for companies engaging in cryptocurrency trading, custody, brokerage, investment services, payments, and token issuance. It establishes a structured regulatory environment aimed at mitigating financial risks, preventing illicit activities such as money laundering, and fostering investor protection and market integrity.

VARA operates under Dubai’s Law No. 4 of 2022, which sets out a legal foundation for virtual asset activities. The licensing process involves comprehensive due diligence, compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations, and adherence to international best practices in financial security and data protection.

The VARA framework categorizes virtual asset service providers (VASPs) into different tiers based on their activities, such as exchange operators, custodians, advisory firms, and token issuers. Each category has distinct compliance requirements, capital adequacy standards, and operational guidelines.

A VARA license is mandatory for businesses wishing to engage in virtual asset-related activities within Dubai, and operating without one can result in legal penalties, fines, and business restrictions.

Who needs to obtain a VARA License in Dubai?

A VARA (Virtual Assets Regulatory Authority) license is required for businesses and entities involved in virtual asset-related activities in Dubai. The licensing framework ensures that only regulated and compliant companies operate in the cryptocurrency, blockchain, and digital asset sectors.

Virtual Asset Service Providers (VASPs)

The Financial Action Task Force (FATF) defines VASPs as businesses that facilitate virtual asset transactions. Any company classified as a VASP in Dubai must obtain a VARA license to operate legally.

Entities that require a VARA license:

Cryptocurrency exchanges

Any platform that facilitates the buying, selling, and trading of cryptocurrencies, stablecoins, and tokenized assets must be licensed. This includes:

Centralized exchanges (CEXs) like Binance or Coinbase (if operating in Dubai)
Decentralized exchanges (DEXs) that provide liquidity and peer-to-peer trading
OTC (Over-the-Counter) trading desks that offer direct crypto transactions

Digital wallet providers

Companies that offer crypto storage solutions, including:

Custodial wallets, where the provider controls private keys
Non-custodial wallets that allow users to manage their private keys but provide additional services

These businesses need to comply with security standards and anti-money laundering (AML) measures under VARA regulations.

Crypto asset management firms

Businesses involved in the investment, management, or advisory services related to virtual assets must obtain a VARA license. This includes:

Hedge funds and venture capital firms investing in digital assets
Portfolio management services specializing in cryptocurrencies
Wealth management firms providing crypto-related financial advice

Token issuers and Initial Coin Offering (ICO) platforms

Companies that issue, promote, or facilitate the sale of new digital tokens or cryptocurrencies must obtain a VARA license. This includes:

Security token offerings (STOs)
Utility token sales
ICO (Initial Coin Offering) and IDO (Initial DEX Offering) platforms

Virtual asset custody services

Entities that provide secure storage and management of digital assets on behalf of clients require VARA licensing. Custody services often cater to:

Institutional investors looking for safe storage solutions
High-net-worth individuals (HNWIs) seeking secure digital asset protection

Crypto payment service providers

Companies that facilitate crypto payment processing and settlements for businesses must be licensed under VARA. This includes:

Crypto payment gateways (e.g., BitPay, CoinGate)
Merchants accepting cryptocurrency payments
Crypto-to-fiat conversion service providers

Virtual asset brokers and dealers

Individuals or firms that act as intermediaries in virtual asset transactions, including:

Over-the-counter (OTC) crypto brokers
Market makers who provide liquidity for virtual asset markets

Crypto lending and staking platforms

Platforms that offer crypto-based lending, borrowing, or staking services must register under VARA. This includes:

Crypto lending platforms that allow users to borrow against digital assets
Staking-as-a-service providers that enable users to earn rewards by staking their cryptocurrencies

Foreign companies expanding to Dubai

Foreign virtual asset businesses that want to operate in Dubai must obtain a VARA license and establish a local presence either:

In a Dubai Free Zone (such as Dubai International Financial Centre – DIFC)
As a Mainland UAE company

Even if a company is licensed in another country, it must still comply with VARA regulations to operate in Dubai.

Startups and entrepreneurs in blockchain & web3

New businesses focused on blockchain technology, DeFi (Decentralized Finance), metaverse projects, and NFT marketplaces also need VARA licensing if their operations involve:

Issuing or trading digital tokens
Building decentralized applications (dApps) that involve virtual assets
Operating Web3 financial services

Who is exempt from a VARA License?

Some blockchain technology companies that do not directly deal with virtual asset transactions may be exempt. Examples include:

Blockchain development firms that do not handle customer funds
Educational platforms that provide crypto learning resources
Technology providers offering blockchain infrastructure services

What is a VARA License Rulebook?

The VARA Rulebook is a set of regulations and guidelines issued by the Virtual Assets Regulatory Authority (VARA) of Dubai to govern the activities of businesses operating in the virtual asset sector. It establishes a comprehensive regulatory framework for cryptocurrency exchanges, digital wallets, asset managers, token issuers, and other virtual asset service providers (VASPs).

The Rulebook ensures transparency, security, and consumer protection while aligning with global anti-money laundering (AML) and counter-terrorism financing (CFT) standards. It includes:

Compliance requirements for obtaining and maintaining a VARA license
Operational guidelines for secure and ethical business conduct
Risk management and security measures for virtual asset transactions
Penalties and enforcement actions for violations

The rules in the VARA license rulebook lay the legal foundation for regulating virtual asset transactions in Dubai. Following these rules helps to ensure a coordinated, safe, and transparent digitalized economy.

Phone number

Prefer messaging? Contact us through messengers or simply give us a call:

Categories of the VARA License in Dubai

The choice of a VARA license depends on your business model and the virtual asset services you plan to offer in Dubai. Each license ensures compliance with Dubai’s regulatory framework while promoting transparency and security in the crypto ecosystem.

If you’re looking to enter Dubai’s booming virtual asset market, understanding the different VARA license categories is essential. The Virtual Assets Regulatory Authority (VARA) offers various licensing options depending on the type of business and services provided. Here’s a breakdown of the main categories:

Advisory services license

This VARA license in Dubai is for businesses providing consulting, research, and advisory services related to virtual assets. It applies to firms that:

Offer investment advice on cryptocurrencies or tokenized assets
Provide market analysis and research on virtual asset trends
Help businesses navigate regulatory compliance in the crypto space

Broker-dealer license

This VARA license is required for companies acting as intermediaries in virtual asset transactions. It covers:

Crypto trading platforms facilitating buying and selling
Over-the-counter (OTC) brokers offering large-scale crypto trades
Market makers who provide liquidity to crypto exchanges

Custody services license

For businesses offering secure storage and management of digital assets, this license ensures compliance with strict security measures. It applies to:

Crypto custodians holding assets on behalf of clients
Digital wallet providers offering safekeeping solutions
Institutional vault services for high-value virtual assets

Exchange services license

This license is for companies operating crypto exchanges where users can trade, swap, or convert virtual assets. It applies to:

Centralized exchanges (CEXs) that facilitate fiat-to-crypto and crypto-to-crypto transactions
Decentralized exchanges (DEXs) offering peer-to-peer trading without intermediaries
Token swap platforms that allow users to exchange different cryptocurrencies

Lending and borrowing services license

This category covers businesses offering crypto lending and borrowing services, including:

Platforms providing loans against virtual assets
Staking-as-a-service providers where users earn rewards
Yield-generating services that allow users to earn interest on crypto holdings

NFT marketplace license

If you’re running a marketplace for Non-Fungible Tokens (NFTs), you’ll need this VARA license in Dubai. It applies to:

NFT trading platforms
Digital art and collectibles marketplaces
Metaverse and gaming NFT services

Token issuance license

Businesses looking to launch and distribute new tokens need this license, including:

Initial Coin Offerings (ICOs)
Security Token Offerings (STOs)
Utility token issuances

Documents required for a VARA License in Dubai

Before applying, businesses must go through a VARA license check to ensure they meet the regulatory requirements. The key documents needed include:

Company registration certificate (proof of legal entity in Dubai)
Business plan detailing virtual asset activities
Ownership structure and shareholder details
AML/KYC compliance policies (anti-money laundering and customer verification)
Financial statements or proof of funds
Security measures for data and asset protection
Detailed risk management framework

Ensuring all documents are in order speeds up the VARA license check and approval process.

"The VARA Rulebook sets the foundation for a secure, transparent, and regulated virtual asset ecosystem in Dubai, ensuring compliance, consumer protection, and industry growth."

Application process for a VARA License

The VARA licensing process in Dubai involves several steps to ensure that businesses comply with the regulatory framework for virtual assets. Companies looking to operate in the crypto space must meet specific VARA license requirements before they can legally provide services. Here’s a step-by-step breakdown of the process:

Determine the type of license needed

Before starting the VARA licensing process, businesses must identify which category of VARA license suits their operations. This depends on the type of virtual asset services they plan to offer, such as trading, custody, advisory, or token issuance.

Establish a business entity in Dubai

To apply for a VARA license, the business must be legally registered in Dubai. Companies can set up in a Dubai Free Zone or Mainland, depending on their operational needs. A local presence is required for all virtual asset service providers.

Prepare the required documentation

One of the key VARA license requirements is submitting the necessary documents, which typically include:

A detailed business plan outlining the company’s virtual asset activities
Proof of company registration and ownership structure
Compliance policies for anti-money laundering (AML) and know-your-customer (KYC) regulations
Security measures to protect customer assets and data

Submit the license application to VARA

Once the documents are ready, the application is submitted to VARA for review. The authority will assess whether the business meets the necessary compliance and operational standards.

Regulatory review and approval

VARA conducts due diligence, evaluating the company’s financial stability, risk management policies, and adherence to local and international regulatory frameworks. This stage may include interviews or additional document requests.

Obtain final approval and pay fees

After successfully meeting all VARA license requirements, the business receives final approval and must pay the licensing fees. The cost varies depending on the type of virtual asset services provided.

Ongoing compliance and supervision

Even after obtaining a VARA license, businesses must comply with ongoing regulatory requirements. This includes regular audits, reporting obligations, and maintaining updated AML/KYC policies.

The VARA licensing process ensures that only compliant and secure businesses operate in Dubai’s virtual asset market. Companies must stay up to date with regulatory changes to maintain their license and avoid penalties.

The cost of obtaining a Virtual Assets Regulatory Authority (VARA) license in Dubai varies based on the specific virtual asset activities your business intends to conduct. Below is a breakdown of the fees associated with different services:

Virtual Asset Activity	Application Fee	Annual Supervision Fee	Minimum Share Capital Requirement
Advisory Services	AED 40,000	AED 80,000	AED 100,000
Broker-Dealer Services	AED 100,000	AED 200,000	AED 400,000 or 15% of fixed annual overheads (if using a VARA-licensed custodian); otherwise, AED 600,000 or 25% of fixed annual overheads
Custody Services	AED 100,000	AED 200,000	AED 600,000 or 25% of fixed annual overheads
Exchange Services	AED 100,000	AED 200,000	AED 800,000 or 15% of fixed annual overheads (if using a VARA-licensed custodian); otherwise, AED 1,500,000 or 25% of fixed annual overheads
Lending and Borrowing Services	AED 100,000	AED 200,000	AED 500,000 or 25% of fixed annual overheads
VA Management and Investment Services	AED 100,000	AED 200,000	AED 280,000 or 15% of fixed annual overheads (if using a VARA-licensed custodian); otherwise, AED 500,000 or 25% of fixed annual overheads

Note: AED 1 = approximately USD 0.27

In addition to the application and supervision fees, businesses must meet specific minimum share capital requirements, which vary depending on the type of service offered and whether a VARA-licensed custodian is used. These capital requirements are designed to ensure that companies maintain sufficient financial resources relative to their operational expenses.

It’s important to note that these fees are separate from any other charges that may be imposed by other competent authorities within or outside the UAE.

You should speak with a VARA license consultant to provide updated information regarding the requirements and fees accruing to the registration.

Validity of the VARA license in Dubai

The VARA license in Dubai is valid for one year from the date of issuance. Businesses must renew their license annually by meeting compliance requirements, submitting updated documents, and paying the necessary renewal fees.

Failure to renew the license on time can result in penalties or suspension of virtual asset activities.

"The VARA license in Dubai is valid for one year and must be renewed annually to ensure compliance and uninterrupted virtual asset operations."

Benefits of getting a VARA license in Dubai

Obtaining a VARA license in Dubai offers several advantages for businesses operating in the virtual asset sector. Here’s why it’s beneficial:

Regulatory credibility: A VARA license ensures compliance with Dubai’s official regulatory framework, enhancing trust and credibility in the global crypto market.
Legal protection: Licensed businesses operate legally and securely, reducing risks of regulatory penalties or shutdowns.
Access to Dubai’s growing crypto market: Dubai is a global hub for blockchain and crypto innovation, offering investment opportunities and a strong digital economy.
Banking & financial services: Licensed entities may have better access to banking solutions, payment gateways, and financial services within Dubai’s ecosystem.
Global expansion & investor trust: A VARA license improves reputation, making it easier to attract investors and expand internationally.
Tax benefits: Dubai offers a business-friendly tax environment, with 0% corporate and personal income tax in many free zones.
Access to innovation & partnerships: The UAE government supports blockchain, Web3, and crypto startups, providing opportunities for partnerships and growth.

Getting the license has many advantages, including giving you access to partnership opportunities and legal protection.

Obtaining a VARA license in Dubai is a strategic move for any virtual asset business looking to operate legally, gain credibility, and tap into the region’s fast-growing digital economy. You leverage it to tap into the burgeoning market and build a solid base for your virtual asset services.