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Process of Obtaining a Virtual Assets License in Dubai

Process of Obtaining a Virtual Assets License in Dubai

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Process of Obtaining a Virtual Assets License in Dubai

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  1. Process of Obtaining a Virtual Assets License in Dubai Dubai has been actively working on becoming a hub for various virtual assets and emerging technologies. Over the past couple of years, Dubai has grown into becoming a hot spot for virtual asset businesses and have created an innovative environment with a sound regulatory system in order to protect the investors and businesses involved in the digital economy. The emergence of Dubai’s Virtual Assets Regulatory Authority (VARA) along with the regulatory framework established by them has been a massive gamechanger for the industry. Leaving all the major “pro-technology” cities behind, Dubai has created its own mark in the world. As its name suggests, Virtual Assets Regulatory Authority (VARA) aims to bring order in the virtual assets space and to offer a world-class regulatory framework in the emirate of Dubai to safeguard investors, maintain high levels of risk assurance, and encourage virtual asset innovation. No virtual assets service providers (VASPs) are permitted to carry out their operations in Dubai without obtaining license from VARA in accordance with the activities carried out by the VASPs. VARA’sVirtual Assets License Dubai provides licenses for the following activities:

  2. •Advisory Services:‘Advisory Services’ refers to offering, providing, or agreeing to provide a personal recommendation to a client, either upon its request, or on the initiative of the Entity providing the recommendation, in respect of one or more actions or transactions relating to any Virtual Asset. •Broker-Dealer Services:‘Broker-Dealer Services’ refers to any of the following: •Arranging orders for the purchase and sale of Virtual Assets between two Entities; •Soliciting or accepting orders for Virtual Assets and accepting currency, or other Virtual Assets for such orders; •Facilitating the matching of transactions in Virtual Assets between buyers and sellers; •Entering into Virtual Assets transactions as a dealer on behalf of the Entity for its own account; •Making a market in Virtual Assets using client assets; or •Providing placement, distribution or other issuance related services to clients issuing Virtual Assets. •Custody Services:‘Custody Services’ refers to safekeeping Virtual Assets for, or on behalf of, another Entity and acting only on verified instructions from/on behalf of such Entity. •Exchange Services: ‘Exchange Services’ refers to any of the following:

  3. a) Conducting an exchange, trade or conversion between Virtual Assets and currency; b) Conducting an exchange, trade, or conversion between one or more Virtual Assets; c) Matching orders between buyers and sellers, and conducting an exchange, trade or conversion between [i] Virtual Assets and currency or [ii] one or more Virtual Assets; or d) Maintaining an order book in furtherance of items [a], [b] or [c] above. •Lending and Borrowing Services: ‘Lending and Borrowing Services’ refers to carrying out a contract under which a Virtual Asset shall be transferred or lent from one or more parties [the Lender(s)] to one or more other party [the Borrower(s)] where the Borrower(s) shall commit to return the same, at the request of the Lender(s), at any time either during or at the end of the period agreed upon, either to its interest or on behalf of others interest. •VA Management and Investment Services:‘VA Management and Investment Services’ refers to acting on behalf of an Entity as an agent, or fiduciary, or otherwise taking responsibility for the management, administration, or disposition of that Entity’s Virtual Assets. •VA Transfer and Settlement Services:‘Transfer and Settlement Services’ refers to the transmission or transfer, and/or settlement of Virtual Assets from one Entity to another Entity or from one Entity to another VA Wallet, address, or location.

  4. Obtaining a VARA virtual assets license Dubai is a 2-step process. Process of obtaining the virtual asset license Dubai (VARA) for new firms: Step 1: Initial Approval Application - Fill out an Initial Disclosure Questionnaire [IDQ] and send it to Dubai Economy & Tourism [DET] or the appropriate Free Zone Authority [FZA]. - As needed, provide further documentation. This documentation will include a business strategy as well as information about the firm’s beneficial owners and top management. - Pay the initial payments [often 50% of the license application price] necessary to begin the application evaluation. - Obtain an Initial Approval to finalize the firm’s formal incorporation and complete operational set-up, such as office space rental and personnel on-boarding. At this time, the company is not authorized to engage in Virtual Asset operations. Step 2: Virtual Asset Service Provider (VASP) License Application After receiving an Initial Approval, a company can apply for a VASP License.

  5. •Prepare and submit documents in accordance with VARA’s guidelines upon receipt of the Initial Approval. •Receive direct feedback from VARA on the proposal, which may involve meetings, interviews, and the submission of further material. •Pay the remaining half of the application license costs as well as the first year’s supervision fees. •Receive a VASP License, which may be conditional on operational requirements. Process of obtaining the virtual asset license Dubai (VARA) for existing firms: •Firms conducting VA Activities in or from Dubai [excluding DIFC] prior to 7 February 2023 have to contact their commercial licensor (DET or the applicable FZA) by 30 April 2023 to submit an Initial Disclosure Questionnaire (IDQ). •Firms who have not completed the IDQ by April 30, 2023, should contact their commercial licensor immediately and plan to do so. •VARA has begun issuing Application Acknowledgement Notices (AAN) to organizations that have completed an IDQ. After receiving an AAN, a company must submit a VASP License application by August 31, 2023. The completion of the VASP License application was previously mentioned.

  6. Obtaining a VARA license is not an easy task. Getting help of a legal consultant with industry experience and knowledge regarding VARA’s regulatory and compliance requirements are very important so that you can operate your business without having to figure out the regulatory landscape all by yourself. Get in touch with our experts at Finjuris today to know more about the virtual asset license Dubai and navigate the world of virtual assets. Visit: https://finjuris.ae/

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