The Virtual Assets Regulatory Authority (VARA) is one of the earliest regulatory bodies to release comprehensive crypto assets regulations to promote crypto-related activities in Dubai. Established in March 2022, VARA was created to promote the emirate 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. The regulatory framework includes four compulsory rulebooks and activity-specific rulebooks for VASPs. The rules will govern VASPs operating within the Dubai region only. The VARA framework also includes a rulebook for marketing, advertising and promotions by VASPs.
Cointelegraph spoke to Deepa Raja Carbon, managing director and vice chair at VARA, to gain insight into the regulatory bodies’ views on the nascent technology and critical challenges it faced while establishing the framework for crypto assets. When asked about VARA’s approach to digital assets and what made it successful compared to other global regulators, Carbon said VARA’s unique proposition lies in its agility, collaborative ethos and ability to respond swiftly to market needs.
Carbon explained that VARA follows the ethos underpinning a philosophy that seeks to “find the highest point of convergence as a universal threshold rather than a minimum standard baseline is what will ultimately elevate and scale the entire ecosystem.”
“VARA is setting a precedent for how regulators can work in cohort with the market, dynamically adjusting to its pulse to sculpt a regulatory environment that is robust, resilient and responsive: the 3R-Pyramid. It is this combination of speed, collaboration and unwavering dedication to quality that defines our progress and, we believe, will help usher in a new era of borderless economic opportunity with traceable, hence minimized, cross-border risks.”
When asked about the key challenges faced by VARA while establishing these virtual asset frameworks, Carbon noted that crafting guidelines for a nascent industry like virtual assets is undeniably challenging. She added that the regulatory body rigorously analyzed existing frameworks and keenly observed the learning curves experienced by other regulatory bodies.
Carbon told Cointelegraph that the regulatory body followed an inherently consultative and collaborative approach by engaging with various stakeholders ranging from industry leaders and innovators to peer regulators and legislators, as well as the general public.
“We ensured our guidelines are not only comprehensive but also resonate with the needs and realities of the market. By working in concert with Dubai’s established entities like DET and the DFZC for Mainland and the various free zones, we’ve crafted a unified and fungible framework.”
VARA’s crypto regulations aim to make Dubai one of the industry’s hot spots as more countries in the Middle East and Asia look to attract digital asset businesses. Hong Kong has also made big strides in crypto regulation in 2023, setting up various regulatory guidelines for crypto platforms catering to retail and institutional clients.