Dubai has become an important destination for businesses working in the virtual asset and crypto industry. As the sector continues to grow, regulation has become an important part of setting up and operating a virtual asset business.

This is where the Virtual Assets Regulatory Authority (VARA) comes in.

VARA regulates virtual asset activities in Dubai, covering both mainland and most free zones, except the Dubai International Financial Centre (DIFC), which has its own regulatory framework. Businesses that want to provide regulated virtual asset services in or from Dubai generally need to obtain the appropriate VARA authorisation before starting operations. 

But what exactly is a VARA licence, and does every crypto business in Dubai need one? Let’s take a closer look.

What Is a VARA Licence?

A VARA licence is a regulatory licence for businesses that conduct specific virtual asset activities in Dubai.

VARA uses an activity-based regulatory model. This means a business does not simply apply for one general “crypto licence.” Instead, it needs authorisation for the specific virtual asset activities it plans to conduct.

VARA currently identifies eight main licensed virtual asset activities:

• Virtual Asset Advisory Services
• Broker-Dealer Services
• Custody Services
• Exchange Services
• Lending and Borrowing Services
• Management and Investment Services
• Transfer and Settlement Services
• Category 1 Virtual Asset Issuance 

A business can apply for multiple activities where appropriate, but it must meet the requirements that apply to each activity.

Who Needs a VARA Licence in Dubai?

The simple answer is: businesses carrying out regulated virtual asset activities in or from Dubai generally need VARA authorisation before beginning those activities.

This can include companies operating crypto exchanges, broker-dealers, custodians, virtual asset investment or management services, lending platforms, transfer services and certain virtual asset issuance activities.

For example, a company that operates a platform allowing customers to exchange crypto assets may fall within the scope of Exchange Services. A company holding virtual assets on behalf of clients may require a Custody Services licence.

The exact requirement depends on what the business actually does, not simply what it calls itself.

VARA also states that there is no blanket exemption for virtual asset activities. Depending on the activity, an entity may need a licence, registration or a No Objection Certificate (NOC). 

What Are the Main VARA Licence Activities?

Understanding the activity categories is important before starting a VARA licence application in Dubai.

1. Advisory Services

Businesses providing personal recommendations relating to virtual assets may fall under VA Advisory Services.

2. Broker-Dealer Services

This can include arranging or accepting orders, facilitating transactions between buyers and sellers, and certain placement or distribution services.

3. Custody Services

Custody involves safeguarding virtual assets for another entity and acting on verified instructions. VARA has specific requirements for custody businesses, including requirements around segregation and governance.

4. Exchange Services

Businesses facilitating the exchange or conversion of virtual assets and fiat currency, or one virtual asset for another, may require an Exchange Services licence.

5. Lending and Borrowing

Businesses providing regulated virtual asset lending or borrowing services may need the relevant VARA authorisation.

6. Management and Investment Services

This category can cover businesses managing, administering or making investment decisions involving another entity’s virtual assets.

7. Transfer and Settlement Services

Businesses involved in transferring or settling virtual assets between entities or wallets can fall under this category.

8. Category 1 VA Issuance

Certain virtual asset issuances, including categories defined by VARA’s issuance rules, require a VARA licence. Other types of issuance may have different approval requirements. 

Do All Crypto Businesses Need a VARA Licence?

Not necessarily in the same way.

This is one of the most important points for entrepreneurs considering crypto business setup in Dubai.

A business needs to look at its actual activities and determine whether they fall within VARA’s regulatory perimeter.

For example, proprietary trading using a company’s own funds may be treated differently from providing trading services to clients. VARA states that certain proprietary traders may operate without a VASP licence but may require an NOC, while proprietary trading above specified thresholds can require registration. 

Similarly, businesses working with blockchain or Distributed Ledger Technology (DLT) may not automatically need a VARA licence simply because they use blockchain technology. However, if their activities fall within regulated virtual asset services, VARA authorisation may be required.

This is why VARA licence requirements in Dubai should be assessed based on the business model before selecting a licence category.

VARA Licence vs Dubai Business Licence

A common misunderstanding is that obtaining a normal Dubai business licence automatically gives a company permission to provide regulated virtual asset services.

It does not.

A company may first need to establish the appropriate legal entity through Dubai Economy and Tourism (DET) or an eligible Dubai free zone and then complete the VARA licensing process for its regulated virtual asset activities. VARA’s application process for new firms involves an Approval to Incorporate stage followed by the VASP licence stage. 

In simple terms:

Company formation creates the business structure.
VARA authorisation allows the business to conduct regulated virtual asset activities.

Both parts need to be planned together.

How Does the VARA Licensing Process Work?

For a new firm, VARA describes the licensing process as a two-stage process.

The first stage involves submitting an Initial Disclosure Questionnaire through the relevant commercial licensing authority and providing information such as the business plan, beneficial ownership and senior management details.

If the application progresses, the firm may receive an Approval to Incorporate (ATI). This allows the company to complete its legal incorporation and operational setup.

However, receiving an ATI does not mean the company can immediately start providing virtual asset services. VARA clearly states that virtual asset activities cannot begin until the required VASP licence has been obtained. 

Why Compliance Matters

A VARA licence is not simply a document obtained at the beginning of a business journey. Licensed businesses must continue meeting VARA’s regulations, rules and licensing conditions.

This can involve areas such as governance, risk management, compliance, client protection, technology, financial controls and anti-money laundering requirements, depending on the business activity.

Operating without the appropriate authorisation can create serious regulatory and business risks. VARA actively publishes information about unlicensed VASPs and advises users to verify the licensing status of virtual asset providers. 

How ReCorporate Can Help With VARA Business Setup

Setting up a regulated crypto or virtual asset business requires more than simply registering a company.

The business structure, proposed activities, licensing route, office requirements, compliance planning and corporate banking strategy should be considered together.

ReCorporate can support entrepreneurs with UAE company formation, Dubai business setup, corporate services and business structuring, helping founders plan their setup before moving forward with the relevant regulatory process.

For businesses exploring VARA licence Dubai, crypto business setup Dubai, or UAE virtual asset business setup, getting the structure right at the beginning can make the overall process more organised.

Final Thoughts

Dubai’s virtual asset sector is developing within a structured regulatory environment. For businesses providing regulated crypto and virtual asset services, understanding VARA requirements should be an early part of the business planning process.

There is no single VARA licence that fits every business. The appropriate authorisation depends on the activities the company plans to conduct.

If you are considering starting a crypto business in Dubai, the right approach is to first understand your business model, identify the relevant virtual asset activities, establish the appropriate company structure and then plan the VARA licensing process around those activities.

With the right preparation and professional support, entrepreneurs can build a more organised foundation for entering Dubai’s growing virtual asset market.

FAQs

What is a VARA licence in Dubai?
A VARA licence authorises eligible businesses to conduct regulated virtual asset activities in or from Dubai, subject to VARA’s regulatory requirements.

Who needs a VARA licence in Dubai?
Businesses conducting regulated virtual asset activities such as exchange, broker-dealer, custody, advisory, lending, investment management or transfer and settlement services generally need the relevant VARA authorisation before operating.

Is a normal Dubai business licence enough for a crypto business?
Not necessarily. A company conducting regulated virtual asset activities may also need the appropriate VARA licence.

Does every blockchain company need a VARA licence?
No. Using blockchain technology alone does not automatically mean a VARA licence is required. The company’s actual activities determine whether they fall within VARA’s regulatory scope.

Can a company apply for more than one VARA activity?
Yes. A VASP can apply for multiple activities, but it must satisfy the requirements applicable to each activity.