Dubai’s VARA Establishes June 19 Deadline for Crypto Companies
Dubai’s Virtual Assets Regulatory Authority (VARA) has unveiled significant updates to its cryptocurrency policies, aiming to enhance risk management and bolster investor protection. The revised regulations will impose stricter controls on margin trading and token distribution services, with the goal of creating a more scalable crypto ecosystem. This announcement follows the Dubai Land Department’s recent pilot of the “Real Estate Tokenisation Project,” which seeks to foster partnerships between global Web3 companies and Dubai’s real estate sector.
Enhanced Compliance Requirements
On May 19, VARA announced its updated policies, emphasizing the need for clarity in compliance across all licensed crypto and Web3 activities. Service providers involved in crypto advisory and custody services must now align their operations with these new guidelines. Additionally, exchanges, broker-dealers, and lending services are required to comply with the revamped regulations. Ruben Bombardi, VARA’s General Counsel and Head of Regulatory Enablement, stated that these updates are crucial for establishing a responsible and scalable ecosystem. The changes aim to ensure that all participants in the crypto market adhere to high standards of operational integrity and investor safety.
Regular Client Risk Assessments
A key component of the updated VARA regulations is the implementation of client risk assessments every three months. Virtual asset service providers are now mandated to verify their clients’ identities, collecting essential information such as names, nationalities, addresses, birthplaces, and employer details. The VARA has highlighted that these updates are intended to foster greater market discipline, enhance risk transparency, and improve operational resilience within Dubai’s virtual asset landscape. By enforcing these measures, the authority aims to mitigate potential risks and protect investors from fraudulent activities.
Support for Compliance
In the coming days, VARA officials will engage with licensed crypto entities to assist them in navigating the updated operational guidelines. The agency’s Supervision Team will offer tailored guidance specific to the activities of each entity. To facilitate a smooth transition, VARA has established a 30-day compliance window, with a deadline set for June 19. This proactive approach underscores the authority’s commitment to ensuring that all crypto businesses operate within the new regulatory framework.
Addressing Fraudulent Activities
Recently, VARA has expressed concern over the rise in crypto-related fraudulent activities, which pose significant financial risks to investors. In February, the agency cautioned investors about the speculative nature of memecoins, urging them to exercise caution. The regulatory body has previously revised its crypto marketing policies in September 2024, reflecting its ongoing efforts to adapt to the evolving landscape. As part of its commitment to integrating crypto and blockchain technologies with government services, Dubai’s Department of Finance recently partnered with Crypto.com to enable crypto payments for government services, further illustrating the emirate’s dedication to fostering innovation in the financial sector.
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