Introduction
Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, declared that Dubai has become the world’s largest licensed market for virtual assets, with transactions surpassing Dh 2.5 trillion since the start of 2025.
Dubai has become a leader worldwide by setting up the regulator for virtual assets known as Virtual Assets Regulatory Authority (VARA). It is established under Dubai Law No. 4 of 2022, which is a radical and organized recourse to the issues of the crypto economy of the future.
Dubai’s regulatory model, along with its Banking and Financial Services Regulation is visionary, aligning technological advancement with enforceable legal standards, therefore making sure that innovation is not limited but is regulated by a strong governance structure.
Please Note: The establishment of VARA is part of a wider digital economy strategy in Dubai. The Digital Economy Strategy 2025 sets out the vision for the city to become the leading global virtual asset and fintech hub, with a strong Web3 ecosystem.
What is the VARA License?
VARA License is a compulsory legal permit for any company that wants to carry out crypto-related or virtual asset activities in Dubai, plus its development and free zones (except Dubai International Financial Centre, which has its own regulator, the Dubai Financial Services Authority).
The VARA licensing scheme covers a wide range of activities from virtual asset advisory and brokerage to custody, exchange, and lending services, all of which are based on the international standards such as the Financial Action Task Force (FATF) recommendations and anti–money laundering (AML) laws. It is aimed at protecting investors, facilitating openness, and preserving the stability of the financial system
Crucial Note: For worldwide fintech companies, obtaining a VARA License is not only a prerequisite but also a link to a number of other benefits such as credibility, operational legitimacy, and market access in one of the most innovative jurisdictions in the world.
What are the Advantages of Obtaining a VARA License in Dubai?
The following are the advantages of obtaining a VARA license Dubai
- Legal Authorization to Operate: With a VARA license, corporations are permitted to execute virtual asset activities in Dubai in a lawful manner, and in line with a clear regulatory framework.
- Enhanced Credibility: The licensed institutions become more trusted by the investors, partners, and customers as they comply with the strict regulatory standards.
- Innovation Environment: VARA sustains the innovation by giving a structured yet adaptable environment for Web3, blockchain, and crypto businesses to flourish.
- Diverse Licensing Options: Businesses may select one of several license categories such as advisory, brokerage, custody, exchange, lending, etc. depending on their operational requirements.
- Strong Cybersecurity Standards: VARA implements strong cybersecurity measures to ensure the safety of the platforms, users, and digital assets.
- Investor & Market Protection: By setting clear rules for AML/CFT and transparency, VARA is instrumental in creating a safe and trustworthy financial ecosystem.
What is Covered Under VARA Regulation in Dubai, and Who Is Required or Exempt From Getting a VARA Licence?
As per Article 2 of Dubai Law No. (4) of 2022 Regulating Virtual Assets, a Virtual Asset is defined in law as “a digital representation of value that is capable of being digitally traded, transferred, or used as an instrument of payment or investment”, this includes cryptocurrencies, stablecoins, tokenized assets, and specific types of NFTs.
1. Entities Subject to Licensing
- Any Virtual Asset Service Provider (VASP) that is in Dubai must have a VARA License before they can work.
- The company that offers advisory, brokerage, custody, exchange, lending, management, or settlement services for virtual assets.
- A proprietary trader has to get a VARA registration if their 30-day trading volume is more than $250 million, even if they don’t have clients.
2. Exemptions and Limitations
Only government entities, non-profits, and professionals who have been licensed (lawyers, accountants), and those for whom virtual asset engagement is just a minor part of their primary services, can avail of the exemptions.
VARA provides for a single, unified licensing regime whereby all market participants are required to comply with licensing obligations, thereby eliminating any regulatory gaps and setting a single, enforceable boundary for all virtual asset activities under the Dubai jurisdiction.
How Are Licensed Activities Classified Under VARA in Dubai?
Under the Virtual Assets and Related Activities Regulations 2023, when going for a VARA license application process in Dubai, applicants are required to specify the exact nature of their activities because each activity has different compliance, capital, and operational requirements.
Crucial Note: Every applicant is required to prove financial strength as part of the VARA license requirements in Dubai. A company is obliged to have net liquid assets equal to at least 1.2 times of monthly operating expenses and keep reserve assets equivalent to 100% of client liabilities.
How Much Does a VARA Licence Cost in Dubai?
The VARA license cost in Dubai is not fixed and varies depending on the activity performed. The application fee is usually between AED 40,000 and AED 100,000, while the annual VARA license fees in Dubai range from AED 80,000 to AED 200,000. Moreover, companies are required to account for costs associated with compliance audits, governance documentation, and VARA license renewal each year.
The VARA license cost in Dubai is set out in the table below, and is applicable to all Licence applications and VASPs:
What is the VARA Licensing Process?
The procedure entails two steps with strict due diligence of each stage to ensure legal conformity and operational preparedness.
Stage 1: Approval to Incorporate (ATI)
The first step in obtaining a VARA license in Dubai is to obtain an Approval to Incorporate (ATI), which gives the applicant the right to set up a company in Dubai’s jurisdiction lawfully before commencing virtual asset-related operations.
Applicants are obliged to present the Initial Disclosure Questionnaire (IDQ) to either the Department of Economy and Tourism (DET) for onshore entities or to the relevant Free Zone Authority (FZA), which is generally the Dubai World Trade Centre (DWTC) or the Dubai Multi Commodities Centre (DMCC).
The IDQ is the main instrument introducing:
- The ownership and governance structure,
- The business model and virtual asset activities,
- Risk management and AML/CFT frameworks,
- Target client base and transaction flow diagrams, and
- Financial forecasts as well as proof of capital.
Upon submission of the application, if VARA’s initial due diligence standards are met, the ATI is issued, and the applicant proceeds with the incorporation. However, the entity is not yet permitted to provide any virtual asset services.
Stage 2: Full Operating License
Once the company is established, the entity moves to Stage 2. The local VASP is required to submit a comprehensive application for a VASP License to VARA that involves detailed supporting documents, such as:
- AML/KYC manuals and internal compliance procedures,
- Corporate governance policies and board structures,
- Technology and cybersecurity frameworks,
- Organizational charts and staff designations,
- Verified qualifications of Responsible Individuals (RIs) and senior management, and
- Financial evidence of meeting the minimum capital VARA license requirements in Dubai
VARA inspects documents, including interviews, on-site inspections, and technical checks, as part of the assessment. After receiving the approval, the VARA license Dubai cost, along with the annual supervision charge, is to be paid.
Step 3: Post-Licensing Obligations and Renewal
The entity will have the right to commence its business activities within the scope of the license granted upon obtaining the full operating license. Nevertheless, this is not the end of the road for compliance. VARA mandates ongoing compliance with prudential standards, disclosure requirements, and operational directives.
Companies are required to submit quarterly compliance reports, annual audited financial statements, and incident reports in case of cyber or operational breaches. Besides, the VARA license renewal procedure is on a yearly basis, and thus, the entity needs to furnish evidence of continuous compliance.
What Documents Are Required To Obtain a VARA License in Dubai?
How Kayrouz & Associates Assists with VARA Licensing and Virtual Asset Regulatory Compliance?
Kayrouz & Associates is a full-service law firm in the UAE and the Middle East. Our Team is ready to support you in acquiring and keeping a VARA License in Dubai in the following ways:
- Complete advisory on licensing conditions at VARA covering aspects such as classification of activities, obligations of capital, and standards of compliance.
- Compiling and filing all regulatory materials such as the Initial Disclosure Questionnaire (IDQ), AML/KYC frameworks, etc.
- Support with legal structuring and incorporation, thus, making sure your entity is right for virtual asset operations under Dubai Law.
- Implementation of ongoing regulatory compliance measures, among them quarterly reporting, assistance with annual license renewal, etc.
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