The UAE stands as a global hub for innovation, continuously creating opportunities for businesses to flourish. Recognizing the growing significance of virtual assets, the country has taken proactive steps to regulate and support this emerging sector. To ensure secure and compliant operations, the UAE established the Virtual Asset Regulatory Authority (VARA). This regulatory body plays a crucial role in fostering innovation while maintaining a well-structured and secure environment for virtual asset activities.
Businesses looking to engage in virtual asset activities must obtain the necessary licenses and approvals from the relevant authorities. Here’s a step-by-step guide to help new firms navigate the process of securing a VARA license.
What is VARA (Virtual Asset Regulatory Authority)?
VARA is the official government authority in the UAE responsible for regulating virtual assets like cryptocurrencies, NFTs, and tokens. Its main goal is to support innovation while protecting investors and keeping the virtual asset market secure and trustworthy.
Why a VARA License Matters
If you want to operate a crypto or virtual asset business in the UAE, you must have a VARA license. This license:
- Legitimizes your business
- Builds trust with customers and investors
- Gives you access to the UAE’s fast-growing virtual asset market
- Ensures you meet all legal and compliance standards
Who Needs a VARA License?
You need a VARA license if your business is involved in:
- Cryptocurrency exchanges
- Buying, selling, or trading digital currencies
- NFTs and token issuance
- Crypto custody or wallet services
- Initial Coin Offerings (ICOs)
This applies to both UAE-based companies and foreign businesses wanting to enter the UAE market.
Activities Covered Under the VARA License
VARA regulates several virtual asset activities, including:
- Crypto exchanges and brokerages – Platforms that trade or broker cryptocurrencies
- Custody services – Businesses that store or secure digital assets for clients
- ICO & NFT services – Companies launching or managing tokens or digital collectibles
What You Need to Get a VARA License
To apply, your business must meet key requirements:
- Registered business in the UAE or a Free Zone
- Financial stability – Show proof of enough capital to run your operations
- Technical readiness – Have a secure system and qualified team to manage virtual assets safely
How Much Does a VARA License Cost?
The cost of a VARA license can vary based on the type of activity. It typically includes:
- Application fee
- Annual supervision fee
- Capital requirements depending on business type
For most small to mid-sized firms, the cost can range from AED 40,000 to AED 200,000+, depending on your services and business model.
Steps to Apply for a VARA License
The process of acquiring a Virtual Asset Service Provider (VASP) license is divided into two main stages. New businesses must comply with all requirements at each stage to operate legally and effectively within the UAE.
1. Initial Approval Process
Before commencing operations, businesses need to secure initial approval by following these steps:
Submit an Initial Disclosure Questionnaire (IDQ)
- New firms must submit an Initial Disclosure Questionnaire (IDQ) to the Dubai Economy & Tourism (DET) or the relevant Free Zone Authority.
- The IDQ can be accessed on the VARA website.
Provide Essential Documentation
- Submit a business plan detailing the firm’s objectives and operations.
- Provide information about beneficial owners and the management team.
Pay Initial Fees
- A partial application fee, typically 50% of the total, is required to initiate the review process.
Secure Initial Approval
- Once approved, businesses can proceed with legal incorporation, operational setup (including office space and staffing), and infrastructure development.
- Important: During this stage, entities are not permitted to engage in any virtual asset activities. Failure to meet regulatory standards may result in the revocation of initial approval.
2. VASP License Application
Once initial approval is secured, businesses can move to the next stage to finalize their VASP license:
Prepare and Submit Required Documents
- Submit additional documents based on feedback and instructions provided during the initial approval stage.
Address VARA Feedback
- VARA may request further documentation, meetings, or interviews to ensure compliance.
Complete Fee Payment
- Pay the remaining application fees along with the first year’s supervision fee, if applicable.
Receive the VASP License
- Upon approval, businesses can officially begin their virtual asset operations.
Key Documents Needed for the Application
Applicants must maintain and submit a range of documents, including:
- Certificate of incorporation
- List of ultimate business owners
- Confirmation of compliance (fit and proper confirmations)
- Proof of funding sources
- Governance framework and organizational structure
- Business website details
- Regulatory business plan
- Financial forecasts and statements (entity and group level)
- Evidence of paid-up capital
- Insurance certificates
- Succession and wind-down plans
- Reserve account report
- Details on key personnel (CVs, job descriptions, and passport copies)
Why Choose UAE Auditors for VARA Licensing Support?
Handling the licensing process for VARA compliance requires a thorough understanding of regulatory requirements. UAE auditors can provide expert guidance to ensure that firms meet all necessary criteria efficiently. Their expertise includes:
- Assistance with documentation and compliance filings.
- Advisory services on financial and regulatory obligations.
- Support in preparing business plans and governance frameworks.
- Guidance on meeting VARA’s regulatory standards.
By partnering with professional auditors in Dubai, firms can streamline their application process and improve their chances of securing a VARA license successfully.
