Obtaining a Virtual Asset License in the United Arab Emirates, especially in Dubai, is an essential process for every enterprise that is willing to act within this actively growing industry related to cryptocurrencies and blockchain. It is quite time-consuming, but once somebody tries to accomplish it then it seems quite easy and uncomplicated.
Also read: Top 10 Certified VARA Auditors in Dubai
Step-by-Step Guide to Obtaining a VARA License in Dubai, UAE
Step 1: Initial Disclosure Questionnaire
The Virtual Asset License application process commences with the Initial Disclosure Questionnaire. This represents your initial formal correspondence with VARA, or the Virtual Assets Regulatory Authority, and forms a major part of your application. You will be requested to provide early-stage information about your business, including but not limited to its structure, operational objectives, and the proposed virtual asset activity in which it will engage.
This is going to allow VARA to know your intention and understand whether you are suitable for licensing. Transparent details are required in your application.
Step 2: Development Of Business Plan
A comprehensive business plan is the next main step that will be a chance to show your vision. Your business plan shall include:
- Operational Intentions: Clearly describe what your business will seek to achieve in the virtual assets space.
- Financial Forecasts: Provide realistic projections of your revenue, expenses, and profitability. This will help VARA assess your enterprise's financial viability.
- Integration Strategy: Describe how you will integrate Cryptocurrency into your operation, including any unique services or products to be offered.
A well-written business plan depicts not only your preparedness but also your commitment to ethical behavior and compliance within the Virtual Asset industry.
Step 3: Ownership and Management Information
Complete information regarding beneficial owners and principal management of your company is mandatory. This shall include:
- Identity Verification: Provide documents verifying the identities of your business owners and key executives.
- Background: Emphasize their qualifications and experience as related to the given industry, as well as any relative expertise in operating a virtual asset.
Ownership and management transparency is of the essence at VARA. Transparency breeds trust, and those responsible for the running of the business should be capable of living up to the regulatory requirements set.
Step 4: Payment of Fees
Payment of initial fees, usually 50% of the license application fee, will be requested as a way of kick-starting the review process for your application. Payment of initial fees within this process is an important requirement, evidencing your commitment toward obtaining the VARA license. Keep a record of this transaction as you may be called upon to provide proof of such a payment during the review process.
Step 5: Initial Approval
Once you have submitted your Initial Disclosure Questionnaire and business plan with the associated fees, you'll await initial approval at the hands of VARA. Once this is received, you can make the following key final steps:
- Legal Incorporation: Incorporate your business under relevant laws and regulations in Dubai.
- Operational Setup: Rent office space, establish necessary technology infrastructure, and hire any required skilled personnel.
It is of great essence that it be noted that before the final VARA license is issued, your firm shall not operate in any activity considered a Virtual Asset. Use this time to set up the operational foundation correctly.
Choosing Your Business Structure
You may license a VARA by setting up a Mainland Company or by applying through the Dubai Free Zone Authority, FZA - except DIFC.
- Mainland Companies: The scope can include more business activities, and it can be operated anywhere in the UAE.
- The channels are, for example, Dubai Free Zone Authority: Depending on the applicable tax benefits and streamlined procedures involved in certain operations, you should think over your long-term aim and consult with a professional to decide which avenue will be best suited to suit your needs.
How to Obtain a Full Market Product (FMP) License from VARA in Dubai
Once you have received the initial approval, you can go ahead with the Full Market Product License from VARA. Here's how to negotiate your way through this phase:
Step 1: Application Filing
Submit the documents necessary for an application for a license under the FMP including:-
- Compliance Procedures: Explain your compliance procedures and how you will ensure VARA compliance.
- Operational Guidelines: Describe in reasonable detail your operational procedures with particular emphasis on risk management and the implementation of security.
Step 2: Feedback and Fee Settlement
Upon receipt, VARA may contact you for further information or clarification. Please respond to these promptly and as fully as possible. When your application is complete, you will be asked to rule off the unpaid balance of the application fee and pay the first year's supervision fee. This is a significant step since on-time payment means your application remains active and is not delayed any longer than needed.
Step 3: FMP License Issuance
After compliance with all the aforementioned requirements and payment towards all payable fees, VARA shall grant an FMP license. Such a license is the key to enjoying your full involvement in Virtual Asset activities under Dubai's law, which allows you to work without any further disturbance on the part of the authorities and instead with their promotional support.
Also read: How to Prepare for a VARA Compliance Audit
VARA License Costs and Government Fees
| VA Activity | License Application Fee | License Extension Fee | Annual Supervision Fee | Share Capital |
| VA Transfer and Settlement Services | AED 40,000 / $10,900 | AED 20,000 / $5,450 | AED 80,000 / $21,800 | The higher of AED 500,000 or 25% of fixed annual overheads. |
| Advisory Services | AED 40,000 / $10,900 | AED 20,000 / $5,450 | AED 80,000 / $21,800 | AED 100,000. |
| Broker-Dealer Services | AED 100,000 / $27,250 | AED 50,000 / $13,125 | AED 200,000 / $54,500 | The higher of AED 400,000 or 15% of fixed annual overheads for VASP; otherwise, AED 600,000 or 25% of fixed annual overheads. |
| Custody Services | AED 100,000 / $27,250 | AED 50,000 / $13,125 | AED 200,000 / $54,500 | The higher of AED 600,000 or 25% of fixed annual overheads. |
| Exchange Services | AED 100,000 / $27,250 | AED 50,000 / $13,125 | AED 200,000 / $54,500 | The higher of AED 800,000 or 15% of fixed annual overheads for VASP; otherwise, AED 1,500,000 or 25% of fixed annual overheads. |
| Lending and Borrowing Services | AED 100,000 / $27,250 | AED 50,000 / $13,125 | AED 200,000 / $54,500 | The higher of AED 500,000 or 25% of fixed annual overheads. |
| VARA
Management and Investment Services |
100,000 AED/ $27,250 | 50,000 AED / $13,125 | 200,000AED / $54,500 | The higher of 500,000 AED or 25% of fixed overheads annually |
List of Activities Covered Under the VARA License
- Advisory Services: It provides personalized advice related to virtual asset transactions. The experience of the client in investing in offerings, financial goals, risk tolerance assessment, and acquisition means and loss capacity evaluation.
- Broker-Dealer Services: Order management and management in respect of dealing in transactions. Matching buyers and sellers of virtual assets, acting as an agent for counterparties to trades, and providing issuance services which for VA means compliance with the VA Issuance Rulebook.
- Lending and Borrowing Services: The carrying out of contracts relating to the provision of assets. A virtual asset is lent or transferred to a counterparty, who promises to return that asset either upon demand or at the end of the contract period.
- Custody Services: The holding in the safe-keeping of virtual assets. Custody of assets on behalf of a client and entered into at the client's instruction, client assets are segregated in separate virtual asset wallets and must comply with or be subject to specific rules designed to protect clients.
- VARA Management and Investment Services: Managing or advising on virtual assets. Agents or fiduciaries for entities, investment advice and management, and the management of staking for proof-of-stake distributed ledger technologies. Fees/rewards resulting from the asset management activities.
- VARA Transfer and Settlement Services: To provide for the movement of the virtual asset. To safely keep the keys on behalf of the clients, to facilitate transfer, transmission, and settlement, amongst others, of virtual assets, and to provide for transaction management between persons or from a person to a virtual asset wallet or address.
