The Virtual Asset Regulatory Authority has positioned itself as the primary regulatory body for virtual asset oversight in the Emirate of Dubai. It provides a wide range of licensing options and maintains a stringent licensing process to guarantee the excellence of authorized Virtual Asset Service Providers (VASPs). A Vara License is a type of business license issued by the Dubai Economic Department for professional service providers.
- What is a Vara License?
- What is VARA?
- What are VARA’s objectives?
- What kind of entities does VARA license?
- Capital Requirements for Firms Licensed by VARA
- What is a Category 1 VARA Issuance?
- What is a Category 2 VARA Issuance?
- Key Requirements for a Vara License
- Why Choose Us for Your Vara License Needs?
- How to Get Your Vara License with Us
- Benefits of Working with Us
- Connect with Neeja Corporate Services
What is a Vara License?
A Vara license, also known as a Virtual Company License, is a relatively new license introduced by the Dubai Economy to facilitate business activities for foreign investors and digital entrepreneurs. This innovative license allows holders to conduct business activities online without needing physical office space in Dubai.
What is VARA?
VARA stands for Virtual Assets Regulatory Authority. It is a regulatory body in Dubai that oversees and regulates the trading and investment of virtual assets such as cryptocurrencies. With the rise of digital currencies and blockchain technology, Dubai has recognized the importance of having a regulatory body that can ensure the smooth and secure trading of virtual assets.
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What are VARA’s objectives?
By focusing on driving innovation, delivering high-quality products, providing exceptional customer service, driving growth and profitability, and fostering a collaborative culture, VARA is well-positioned to achieve its goals and become a leader in the industry.
- Drive Innovation: One of the primary objectives of VARA is to drive innovation in the industry. By staying at the forefront of technology trends and constantly pushing the boundaries of what is possible, VARA aims to create groundbreaking solutions that will revolutionize the way businesses operate.
- Deliver High-Quality Products: Another key objective of VARA is to deliver high-quality products to its clients. By adhering to strict quality standards and employing rigorous testing processes, VARA ensures that its solutions are reliable, secure, and user-friendly.
- Provide Exceptional Customer Service: VARA places a strong emphasis on customer satisfaction and aims to provide exceptional service to its clients. By building strong relationships with customers and addressing their needs promptly and effectively, VARA strives to exceed expectations and create long-lasting partnerships.
- Drive Growth and Profitability: As a business, VARA is committed to driving growth and profitability. By identifying new market opportunities, expanding its product offerings, and optimizing its operations, VARA aims to achieve sustainable growth and financial success.
- Foster a Collaborative Culture: VARA recognizes the importance of teamwork and collaboration in achieving its objectives. By fostering a work environment that encourages communication, creativity, and mutual respect, VARA aims to harness the collective talents of its employees and drive innovation forward.
Advantages of Getting a VARA License
- Protecting Your Rights: One of the main advantages of getting a VARA license is that it helps protect your rights as an artist. By having a VARA license, you can claim authorship of your work and prevent others from claiming it as their own.
- Preserving Your Work: Another benefit of a VARA license is that it allows you to preserve the integrity of your work. You have the right to prevent any modifications or distortions to your piece that could harm its original intent.
- Ensuring Proper Attribution: With a VARA license, you can ensure that proper attribution is given to you as the artist. This can help you build your reputation and credibility in the art world.
- Increased Value: Having a VARA license attached to your work can increase its value in the market. Collectors and buyers often see pieces with VARA protection as more valuable due to the added rights and protections it provides.
- Legal Recourse: If someone infringes upon your rights as an artist, having a VARA license gives you legal recourse to seek damages and enforce your rights in court. This can be essential in protecting your work and livelihood.
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What kind of entities does VARA license?
VARA regulates a wide array of virtual asset activities, encompassing advisory services and cryptocurrency exchanges. Below is a partial list of these activities:
1. VA Advisory Services: Companies that offer specialized guidance on virtual asset investments and strategies.
This includes making recommendations to clients regarding transactions involving any Virtual Assets.
When delivering advisory services, the following considerations should be taken into account:
– The client’s knowledge and experience with Virtual Asset investments;
– The client’s specific objectives, financial goals, risk tolerance, and intended investment duration; and
– The client’s financial situation and capacity to absorb sudden and substantial losses related to their Virtual Asset investments.
2. VA Broker-Dealer Services: Organizations that assist clients in buying and selling virtual assets.
This encompasses:
– Transmitting orders for the purchase or sale of VAs;
– Soliciting or accepting orders for Virtual Assets and receiving fiat currency or other Virtual Assets in exchange;
– Facilitating transaction matching among market participants;
– Engaging in Virtual Asset transactions as a dealer for the entity’s account;
– Conducting market-making activities using client assets; or
– Offering placement, distribution, or other related services to Virtual Asset issuers.
3. VA Custody Services: Firms that provide secure storage solutions for virtual assets, ensuring their protection.
4. VA Exchange Services: Platforms that serve as marketplaces for trading various virtual assets.
This includes:
– Matching orders between buyers and sellers and executing exchanges, trades, or conversions between a) Virtual Assets and fiat currency or b) multiple Virtual Assets; or
– Maintaining an order book.
5. VA Lending and Borrowing Services: Companies that enable the lending and borrowing of virtual assets, allowing users to leverage their holdings.
2. VARA oversees a diverse spectrum of virtual asset activities, including advisory services and cryptocurrency exchanges. Below is a non-exhaustive list:
2. VA Advisory Services: Firms that provide expert guidance on virtual asset investments and strategies.
This involves offering recommendations to clients regarding transactions related to any Virtual Assets.
Key factors to consider when providing advisory services include:
– The client’s level of knowledge and experience in Virtual Asset investments;
– The specific objectives and financial goals of the client, along with their risk profiles and investment timelines; and
– The client’s financial circumstances and their ability to withstand sudden and significant losses in their Virtual Asset investments.
5. VA Broker-Dealer Services: Entities that facilitate the buying and selling of virtual assets on behalf of clients.
This includes:
– Transmitting orders for the purchase or sale of VAs;
– Soliciting or accepting orders for Virtual
6. VA Management and Investment Services: Firms managing investment portfolios that include virtual assets, catering to both retail and institutional clients.
This includes —
i) Asset management services for Virtual Assets; and
ii) taking responsibility for the staking of Virtual Assets to earn fees or other amounts paid to validators and/or node operators of a proof-of-stake Distributed Ledger Technology.
7. VA Transfer and Settlement Services: Businesses responsible for the transfer and settlement processes of virtual asset transactions, ensuring efficient and secure operations.
8. NFT Marketplace Services: Entities operating platforms for buying, selling, or trading non-fungible tokens (NFTs), which may require specific licenses depending on their activities.
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Capital Requirements for Firms Licensed by VARA
The capital requirements set by the regulator are influenced by the specific nature of virtual asset activities.
(i.) Advisory Services – US$ 27,300 (AED 100,000)
(ii.) Broker-Dealer Services – For those utilizing a custodian licensed by VARA:
US$ 109,000 (AED 400,000) or
15% of fixed annual overheads
OR
(iii.) For those using a non-VARA licensed custodian:
US$ 163,500 (AED 600,000) or
25% of fixed annual overheads.
(iv.) Custody Services – The greater of US$ 163,500 (AED 600,000) or 25% of fixed annual overheads.
(v.) Exchange Services –
For VARA-licensed VASP for custody – The greater of US$ 218,000 (AED 800,000) or 15% of fixed annual overheads.
In other scenarios – US$ 409,000 (AED 1,500,000) or 25% of fixed annual overheads.
(vi.) Lending and Borrowing Services – The greater of US$ 136,300 (AED 500,000) or 25% of fixed annual overheads.
(vii.) Virtual Asset Management and Investment Services
For VARA-licensed VASP for custody – The greater of US$ 76,300 (AED 280,000) or 15% of fixed annual overheads.
In other scenarios – US$ 136,300 (AED 500,000) or 25% of fixed annual overheads.
(viii.) VA Transfer and Settlement Services –
US$ 136,300 (AED 500,000) or 25% of fixed annual overheads – whichever is higher.
Additionally, VARA mandates that licensed entities maintain an expense-based capital, calculated to be at least 1.2 times their monthly operational expenses. This capital must be held in liquid assets, such as cash in a bank account.
Each VASP is required to fulfill the capital requirements for each activity it applies for, particularly if it is authorized to engage in multiple regulated activities.
How does VARA classify investors?
VARA’s regulations categorize investors into three primary groups:
1. Retail Investors: This group consists of individuals or entities that do not qualify as either qualified or institutional investors. Retail investors typically engage with smaller investment amounts and possess limited experience in the virtual asset market.
2. Qualified Investors: This category encompasses individuals or organizations that fulfill specific financial criteria, such as maintaining a cash reserve of AED 500,000, and exhibiting a solid understanding of virtual assets.
3. Institutional Investors: These are organizations that are overseen by relevant financial authorities, including banks and investment firms, and have substantial expertise in the realm of virtual assets.
A single license may encompass both retail and institutional services; however, the Virtual Asset Service Provider (VASP) must adhere to VARA’s regulations concerning investor classifications and comply with any operational restrictions that may apply.
What is a Category 1 VARA Issuance?
A Category 1 VARA issuance pertains to the authorization and licensing of certain virtual assets by VARA. This category primarily encompasses Fiat-Referenced Virtual Assets (FRVAs), which are designed to maintain a stable value relative to one or more fiat currencies, though they do not possess legal tender status in any jurisdiction. Notably, stablecoins pegged to the Arab Emirate Dirham (AED) must be licensed by the UAE Central Bank rather than VARA.
What is a Category 2 VARA Issuance?
Category 2 issuances encompass all virtual asset issuances that do not fall under Category 1. This includes those conducted by or involving Designated Non-Financial Businesses and Professions (DNFBPs) or those that meet any of the following criteria:
(i) a single transaction that exceeds AED 40,000, or its equivalent in another fiat currency or virtual assets;
(ii) offerings made to 150 or more entities acting on their own behalf; or (iii) over twelve months from the start of the issuance, the total consideration or benefits accrued to the issuer surpasses AED 2 million or its equivalent.
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Key Requirements for a Vara License
To qualify for a vara license in Dubai, you need to meet certain criteria set by the DED. Some of the key requirements include:
- Valid passport copies of the shareholders
- Business plan outlining your objectives and strategies
- Proof of initial approval from relevant authorities (if applicable)
- Lease agreement for your business premises
- NOC from the sponsor (for expatriate shareholders)
By ensuring that you fulfill these requirements, you can increase your chances of obtaining a vara license in Dubai without any hassle.
Why Choose Us for Your Vara License Needs?
- Expertise: Our team of professionals are experts in the field and have helped numerous individuals obtain their Vara licenses with ease.
- Experience: With years of experience under our belt, we have a thorough understanding of the process and can guide you every step of the way.
- Authority: We have built a reputation as a trusted and reliable source for Vara License services, giving you peace of mind knowing you are in good hands.
- Trust: Our clients trust us to deliver results and we take pride in providing top-notch service to each and every individual we work with.
How to Get Your Vara License with Us
So, how exactly can you get your Vara License with us? It’s simple! Just follow these easy steps:
- Consultation: Get in touch with us for a consultation to discuss your specific needs and requirements.
- Documentation: Prepare all the necessary documentation and paperwork required for your Vara License application.
- Submission: We will assist you in submitting your application and ensure that all the requirements are met.
- Approval: Sit back and relax while we handle the process of getting your Vara License approved.
Benefits of Working with Us
- Quick and efficient service
- Dedicated support throughout the process
- Expert guidance and assistance
- Hassle-free experience
In conclusion, if you are looking to get your Vara License without any hassle or stress, we are here to help. Our team of experts can provide you with the support and guidance you need to navigate the process smoothly and efficiently. Don’t waste any more time, get in touch with us today and take the first step towards obtaining your Vara License hassle-free!
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Connect with Neeja Corporate Services
Are you looking to start your new company in Dubai but feeling overcome by the registration process? Don’t worry, you’re not alone. Setting up a business in a foreign country can be challenging, but with the right guidance and support, it doesn’t have to be a stressful experience. Neeja’s business setup services offer complete support and serve as a one-stop shop for company setup in Dubai. We provide a wide range of value-added services, such as a VARA License Categories. Over the years, we have successfully advised many new entrepreneurs to make their business dreams a reality.
To book a free consultation, call on +971 43243031. You can also send a WhatsApp message at +971 50 465 2843. To connect over email, send us your query at incorp@neejacs.com.
