Dubai has just paved a new way to operate for businesses involved in cryptocurrency usage. Starting 31st August 2023, all businesses must be certified by VARA – The Virtual Assets Regulatory Authority of Dubai if they use cryptocurrency in their business. The aim is to promote legitimacy, security and transparency in the existing cryptocurrency operations in Dubai. In this blog by Next Generation Corporate Services, we will learn all about the new VARA regulations, explore their impact on new Business Setups in Dubai, and discuss how you can apply for the new Virtual Asset Service Provider (VASP) license.
What to Expect From VARA-Certified Businesses
With the rise of crypto exchange and payments, Dubai is focusing on providing a regulatory framework to avoid crypto discrepancies and malpractices. Now that every business that is involved in cryptocurrencies requires a VARA certification, below are some of the regulatory shifts that will follow:
- Licensed and Regulated Entities
Now, all businesses must prove their VARA-certified credentials if they want to conduct cryptocurrency activities in Dubai. This will limit the unauthorised activities and fraud related to virtual assets in Dubai.
- Increased Security
Individuals using cryptocurrencies for payments, such as property investment or settling hotel bills, can now expect greater protection. With this, Dubai aims to provide an environment where businesses can be held accountable.
- New Business Setups in Dubai
Now that Dubai has regulated cryptocurrency activities in the emirate, you will need a Virtual Asset Service Provider License to start your virtual asset business in Dubai. Next Generation Corporate Services will assist and guide you in acquiring this license and Setting Up a Business in Dubai.
The Impact of VARA-Certification in Dubai
The implications of the newly introduced VARA certification will indeed affect businesses and individual’s cryptocurrency usage. Below are some of the impacts:
- The Daily Cryptocurrencies Transactions: All businesses involved in the transactions pertaining to bitcoins and other cryptocurrencies, whether investing in properties, paying hotel bills, purchasing any cryptocurrency, hotels and car rental dealers which are accepting virtual assets for transactions, must be VARA-certified.
- Licensing Criteria: Businesses already qualifying for the ‘Full Market Product’ license can transition to VARA regulation. You need to give out an application for initial approval to set up your business, and then you need to apply for a VASP – Virtual Asset Service Provider licence to commence the business. An ‘Initial Disclosure Questionnaire’ issued by VARA was the first regulatory hurdle, with consequences for non-compliance.
- The Role of VARA (Virtual Assets Regulatory Authority): VARA is responsible for regulating and supervising the activities related to virtual assets in Dubai, except DIFC (Dubai International Financial Centre). The main goal is to make Dubai a world centre for cryptocurrency businesses.
The Process of Getting VARA-Certified in Dubai
The process of getting VARA-certified in Dubai includes the following simple steps:
- Initial Approval Application Requirements
To get the initial approval, an Initial Disclosure Questionnaire is submitted along with documents, including a business plan and management details. After the initial approval, you must apply for a VASP License, which is the license to commence activities related to virtual assets.
All the applications related to VARA approval and licenses should be submitted to Dubai Economy and Tourism (DET) for mainland firms or any Dubai Free Zone Authority (FZA) in the emirate of Dubai.
- The VASP (Virtual Asset Service Provider) License
After getting the initial approval, you are still not authorised to commence virtual asset business operations. For that, you have to apply for a VASP license. You can obtain a VASP license by following the below steps:
- After receiving VARA’s Initial Approval, you should follow the instructions provided by the regulatory body and submit the required paperwork.
- Meetings, interviews, and other paperwork may be required after receiving direct feedback from VARA on the submission.
- Make the final licensing fee payment and the first year’s supervision payment and receive the VASP License.
Getting VARA-certified in Dubai is a two-step process and requires undivided attention. it is best to consult a business consultant in Dubai, like Next Generation Corporate Services, who can assist and guide you through getting a VASP license in Dubai.
An Insight into The Growing Interest in Dubai’s Crypto Market
Implementing VARA Certification in Dubai has piqued the interest of businesses and investors. Below is an insight into the growing cryptocurrency market in Dubai and the advantages it provides:
- Increasing Inquiries: Dubai’s recent crypto events and the establishment of VARA have attracted international attention. There has been a 33% increase in crypto and virtual asset business inquiries since January. It is projected that the numbers will only increase from here. So, considering the frequent changes in the regulatory framework to solidify the business environment, it is the best time to Set Up a Business in Dubai with Next Generation Corporate Services.
- Attracting International Investors: The growing fintech landscape with over 850 Fintech startups in Dubai draws global investors’ interest. Most of the inquiries come from regions like The UK, India, South Africa and beyond.
- Using the Regulatory Advantages: Businesses and individuals are capitalising on Dubai’s regulatory advantages and establishing local entities. A straightforward legal framework makes Dubai one of the most appealing places to start your business.
Insights from Next Generation Corporate Services
The decision to mandate VARA certification for every business involved in virtual assets is a pivotal moment for the cryptocurrency landscape of Dubai. This regulation will offer security and transparency to all stakeholders. New businesses wanting to establish their presence in Dubai can now confidently trade and make payments with cryptocurrencies, as digital assets will now be regulated in Dubai. If you want to capture the market of Dubai and looking to set up your business there, you can contact Next Generation Corporate Services, one of the most competent Business Setup Services and Professional Corporate Service providers in Dubai. Book A no-obligation consultation today!