Overview of the Virtual Asset Regulatory Authority

The potential for the Virtual Asset market to flourish is enormous, given the increasing popularity of Virtual Assets such as Cryptocurrencies and NFTs, as well as the increased significance of blockchain technology across a variety of sectors around the world.

Given this notion, the crypto industry in Dubai will now be governed by a new set of rules. H.H Sheikh Mohammed bin Rashid Al Maktoum, the UAE Prime Minister, has signed a new law regulating virtual assets and formed an independent organization to supervise the crypto space's governance.

Dubai's Virtual Asset Regulatory Authority (VARA) will categorize virtual asset types and establish controls to monitor the digital asset sector. With its authority to impose penalties and suspend firms, VARA will also play a role in penalizing those who break the new legislation.

The proposed regulation will require residents of Dubai to register with VARA before participating in any crypto-related activity. Businesses that deal with virtual assets would also need to register. Bitcoin exchanges, businesses that facilitate cryptocurrency transfers, and so on are examples of these businesses. Except for the government-owned DIFC financial free zone, the new rule will apply throughout Dubai. The DIFC's regulator, the Dubai Financial Services Authority (DFSA), is working on its virtual asset legislation.

With the rule in place, Dubai now has a legal mandate for selling and trading cryptocurrencies like Bitcoin, even though many countries, like China, have taken the opposite approach.

Role and activities of VARA

The following comprise the various roles to be undertaken by VARA:

• Coordinating the production and trading of virtual assets and tokens
• Coordinating and authorizing virtual asset service providers to ensure the highest levels of data protection for beneficiaries
• Coordinating the operation of platforms and portfolios for virtual assets
• Monitoring transactions and preventing price manipulation of virtual assets.

The following are the various activities that are to be conducted under VARA:

• Platform services for operating and managing virtual assets
• Exchange services between virtual assets and currencies, whether domestic or international
• Exchange services between one or more virtual asset types
• Transfer services for virtual assets
• Custody and management services for virtual assets
• Services relating to the portfolio of virtual assets
• Services relating to the sale and exchange of virtual tokens

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