Quick Take

• VARA is Dubai’s main regulator for all mainland crypto activities.
• Eight licence types cover exchanges, brokerage, custody, wallets, transfers and token issuance.
• Capital requirements range from AED100,000 to AED5million per licence.
• Application is fully digital - expect a 6‑12week turnaround if you’re prepared.
• Key differences to DFSA (DIFC) and FSRA (ADGM) revolve around jurisdiction and investor‑protection rules.

What is VARA and Why It Matters

Dubai Virtual Assets Regulatory Authority (VARA) is the Emirate’s dedicated regulator for virtual assets, launched in 2022 and revamped in 2025 to cover DeFi, NFTs and tokenised assets. Its mandate is to create a clear,digital‑first licensing regime for Virtual Asset Service Providers (VASPs) operating outside the Dubai International Financial Centre (DIFC). By aligning with Financial Action Task Force (FATF) standards, VARA offers a predictable environment that attracts global exchanges, custodians and token issuers.

For businesses, VARA’s framework translates into one clear point of contact for compliance, a single set of AML/CFT rules and a transparent fee structure. It also means you must base your legal entity in mainland Dubai or a designated free‑zone - 100% foreign ownership is permitted, but you cannot bypass local registration.

Licensing Landscape - Types, Capital & Fees

VARA categorises licences into seven core services. Each comes with its own paid‑up capital floor and fee schedule (all figures are AED unless noted). The table below summarises the key numbers.

When a company seeks multiple licences, the capital requirements are cumulative. A typical full‑service crypto hub (exchange+custody+broker‑dealer) would need at least AED10million in paid‑up capital.

Step‑by‑Step: How to Apply for a VARA Licence

1. Set up a local legal entity. Incorporate in mainland Dubai or a recognised free‑zone (e.g., Dubai Multi‑Commodities Centre). Ensure 100% foreign ownership if you’re not a UAE national.
2. Prepare the core documentation. This includes:
   • Detailed business plan (covering services, target markets, revenue model).
   • AML/CFT policies aligned with FATF recommendations.
   • Technology architecture diagram, security framework and data‑storage approach.
   • Fit‑and‑proper declarations for directors and senior managers.
3. Upload everything to the VARA portal. The authority launched a fully digital portal in Q12025. Files are accepted in PDF, JSON or XML formats. An automated pre‑check validates file size, naming conventions and basic compliance fields.
4. Pay the fees. Application fees are payable via UAE‑based bank transfer or approved e‑payment gateway. A receipt is generated instantly and must be attached to the submission.
5. Initial review (2‑4weeks). VARA’s compliance team runs a risk‑based assessment, focusing on AML/KYC, capital adequacy and technology safeguards. They may request clarifications or additional documents.
6. Fit‑and‑proper interview. Senior management must attend a video interview with the regulator. Expect questions on governance, whistle‑blowing mechanisms and contingency plans.
7. Final approval (6‑12weeks total). Upon successful review, VARA issues a licence certificate with a unique licence number. You’ll receive a digital seal to embed on your website and marketing materials.
8. Ongoing compliance. Annual supervision fees are due each calendar year. You must submit audited financial statements, AML transaction reports and an updated technology risk assessment.

Tip: Companies that embed a dedicated compliance officer from day1 and run regular internal audits usually shave two weeks off the review timeline.

How VARA Differs from DFSA and FSRA

While VARA covers the Dubai mainland, the Dubai Financial Services Authority (DFSA) governs the DIFC and focuses on investment‑related activities, and the Financial Services Regulatory Authority (FSRA) oversees the Abu Dhabi Global Market (ADGM). Key contrasts:

• Jurisdiction. VARA applies to any VASP operating outside the two financial free‑zones, giving it the widest geographic coverage in the UAE.
• Licence granularity. DFSA bundles custody and trading under a single ‘Capital Markets’ licence, while VARA splits them into distinct categories, allowing more tailored capital requirements.
• Retail investor protection. VARA enforces stricter advertising approvals and mandatory risk‑disclosure for token issuers, mirroring the EU’s MiCA approach.
• Tax treatment. Both VARA and DFSA benefit from the UAE’s zero‑tax regime on crypto gains, but VARA provides clearer guidance on VAT applicability for service fees.

In practice, an international exchange often registers with VARA for its main trading platform, then obtains a DFSA licence for its DIFC‑based corporate treasury and a separate FSRA licence for any fund‑management activities in Abu Dhabi.

Real‑World Cost Example

Suppose you want to launch a mid‑size exchange that also offers custodial wallets and a brokerage desk. The capital and fee breakdown would look like this:

• Exchange licence - AED5million capital, AED100000 application, AED200000 annual.
• Custody licence - AED4million capital, AED80000 application, AED150000 annual.
• Broker‑Dealer licence - AED1million capital, AED60000 application, AED120000 annual.

Total paid‑up capital: AED10million (≈USD2.7million). Initial fees: AED240000. First‑year supervision fees: AED470000. Add the cost of legal counsel (≈AED150000) and an external audit firm (≈AED120000), and you’re looking at a roughly AED980000 (~USD267000) upfront investment.

Smaller firms can start with a wallet or transfer licence, which only requires AED100000 capital and a AED40000‑50000 fee, dramatically lowering the barrier to entry.

Practical Tips & Common Pitfalls

• Don’t treat compliance as a paperwork chore. VARA evaluates the actual implementation of AML/KYC systems. Deploy a dedicated compliance platform (e.g., Chainalysis or Elliptic) before you submit.
• Prepare your token white‑paper early. Since June2025, every token issuance must include a risk‑disclosure annex approved by VARA. Missing this step adds two‑plus weeks to the timeline.
• Avoid privacy‑focused tokens. Administrative Order2023/2024 bans Monero, Zcash and similar coins. If you plan to list them, you’ll need a special exemption that is rarely granted.
• Plan for ongoing audits. External security audits must be conducted annually, and audit reports must be uploaded to the VARA portal within 30days of issuance.
• Mind the marketing rule. All promotional material, including social media posts, must be pre‑approved. Keep a copy of the approval certificate on hand for any regulatory query.

Companies that ignore these nuances often receive a “request for additional information” (RAI) notice, extending the process by 4‑6weeks and sometimes incurring extra fees.

Future Outlook - What’s Next for VARA?

Analysts expect VARA to widen its scope to cover Decentralised Autonomous Organisations (DAOs) and advanced DeFi protocols by late2025. A separate “DAO‑operator” licence is rumored, with capital thresholds aligned to the underlying asset value. Additionally, VARA is piloting a cross‑border transaction monitoring platform that will share AML data with European regulators, further cementing Dubai’s reputation as a compliant crypto hub.

For businesses, this means staying agile. Build flexibility into your governance framework now, and you’ll be ready to add new licences without a full re‑registration.