SCA and VARA Introduce New Licensing Rules: A Positive Step for VASPs

In a remarkable move to enhance the UAE's position as a global leader in virtual assets, the Securities and Commodities Authority (SCA) and Dubai’s Virtual Assets Regulatory Authority (VARA) have entered a pivotal agreement to strengthen the regulatory framework for virtual asset service providers (VASPs) in the UAE.

This agreement will establish comprehensive rules and procedures for licensing and supervising VASPs and their related activities, in line with Cabinet Decision No. 111 of 2022 and No. 112 of 2022. In fact, the agreement facilitates streamlined licensing processes: VASPs operating in or from Dubai will be licensed by VARA, while those in other Emirates will seek approval from the SCA.

In other words, the two parties agreed that VASPs operating in or from Dubai, or wishing to serve the emirate, must obtain a license from VARA and can be automatically registered with the SCA for operations across the UAE, and VASPs looking to operate in other Emirates must be licensed by the SCA.

The agreement, formalized at the SCA's Dubai branch, was signed by Her Excellency Dr. Maryam Buti Al Suwaidi, CEO of the SCA, and Mr. Matthew White, CEO of VARA. The ceremony was attended by key figures including HE Mohamed Ali Al Shorafa, Chairman of the SCA, and HE Helal Saeed Al Marri, Chairman of VARA’s Executive Board.

HE Al Shorafa highlighted the critical role of inter-regulatory cooperation in attracting global businesses to the UAE's dynamic financial sectors. He emphasized the importance of a unified regulatory approach to manage the rapid growth and interest in virtual assets, ensuring stability and promoting sustainable development.

HE Al Marri underscored the agreement's role in supporting Dubai’s 2033 Economic Agenda, which envisions the emirate as a global hub for innovation. The regulatory alignment between the SCA and VARA is seen as foundational to building investor confidence and positioning the UAE as a leader in the future of finance.

The agreement also outlines mechanisms for mutual supervision, penalties for non-compliance, and the exchange of information and training for regulatory staff. This collaborative effort highlights the UAE’s commitment to creating a robust, secure, and interoperable virtual assets ecosystem while adhering to stringent anti-money laundering and counter-terrorism financing regulations.

With this landmark agreement, the UAE continues to set a global standard in the regulation of virtual assets, reinforcing its role as a pioneering force in the evolving digital economy.