The Virtual Asset Regulatory Authority (VARA) is one of the first regulators in the world to issue comprehensive crypto-asset regulations to promote crypto-related activities in Dubai. VARA was established in March 2022 to promote the UAE as a regional and international hub for virtual assets and related services.
VARA released a comprehensive regulatory framework for virtual asset service providers (VASPs) in February this year. The regulatory framework consists of VASP’s four mandatory rulebooks and activity-specific rulebooks. These rules only apply to VASPs operating in the Dubai area. The VARA framework also includes the VASP Rulebook for Marketing, Advertising and Promotion.
Cointelegraph spoke with Deepa Raja Carbon, Managing Director and Vice Chairman of VARA, to gain insight into regulators’ views on emerging technologies and the key challenges they face in establishing a framework for crypto-assets. When asked about VARA’s approach to virtual assets and the reasons for its success compared to other global regulators, Raja said VARA’s unique proposition lies in its agility and collaborative spirit and ability to respond quickly to market needs.
Raja explained that the ethos followed by VARA is a philosophy that aims to “find the highest point of convergence as a universal threshold, rather than the lowest standard baseline, that will ultimately enhance and expand the entire ecosystem.”
“VARA sets a precedent for how regulators can work with the market to dynamically adjust to the pulse of the market and shape a robust, resilient and responsive regulatory environment: the 3R Pyramid. It is a combination of speed, collaboration and an unwavering dedication to quality. Determining our progress, we believe this will help usher in a new era of economic opportunities that are borderless and traceable, thereby minimizing cross-border risks,” added Raja.
When asked about the main challenges faced by VARA in establishing these virtual asset frameworks, the Vice Chairman noted that developing guidelines for an emerging industry such as virtual assets is undoubtedly challenging. She added that the regulator rigorously analyzed the existing framework and was keenly aware of the learning curve experienced by other regulators.
related: Crypto Cities: A Guide to Dubai
Raja told Cointelegraph that regulators follow an inherently consultative and collaborative approach, engaging with a variety of stakeholders ranging from industry leaders to innovators, fellow regulators to legislators, and the general public.
“We ensure that our guidelines are not only comprehensive but also in line with the needs and realities of the market. By working with established entities in Dubai, such as the DET and DFZC, as well as the mainland and various free zones, we have developed a unified and fungible framework . ”
As more Eastern countries seek to attract virtual asset businesses, VARA’s cryptocurrency regulations aim to make Dubai one of the industry’s hotspots. Hong Kong also made significant progress in cryptocurrency regulation in 2023, developing various regulatory guidelines for cryptocurrency platforms that cater to retail and institutional clients.
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