VARA Crypto Licensing Requirements in Dubai: A Complete 2025 Guide for VASPs

• By JayKay Sun
• 22 Oct, 2025
• 2 Comments

Dubai's cryptocurrency market grew over 300% in 2024. But here's the catch: without a VARA license, operating any crypto business in Dubai is illegal. VIRTUAL ASSETS REGULATORY AUTHORITY (VARA)Dubai's official regulator for virtual assets, established in 2022 to oversee all crypto businesses in the emirate (excluding DIFC) isn't just another government body-it's a game-changer for crypto companies looking to operate legally in one of the world's fastest-growing digital asset hubs.

What is VARA and Why It Matters in 2025

Before VARA, crypto regulation in Dubai was messy. Now, it's clear: if you handle digital assets in Dubai, you need VARA's approval. This includes exchanges, wallets, NFT platforms, and DeFi projects. VARA's rules ensure Dubai stays a safe, transparent hub while protecting investors from scams. In 2025, VARA expanded its scope to cover DeFi protocols, NFTs, and tokenized assets. This makes it the most comprehensive crypto regulator in the Middle East.

The Six VARA License Categories

VARA breaks down crypto services into six main license types. Each has specific requirements. Let's break them down:

• Exchange services - Platforms where users trade cryptocurrencies. Examples include spot trading for Bitcoin and Ethereum.
• Broker-dealer services - Helping clients buy/sell crypto with fiat or other tokens. This includes both fiat-to-crypto and crypto-to-crypto trading.
• Custody services - Safeguarding clients' crypto assets. This requires strict security and insurance coverage.
• Transfer services - Moving crypto between wallets or accounts. Think of services that handle transfers between users.
• Wallet provision services - Offering digital wallets for storing crypto. These must meet security standards to prevent hacks.
• Token issuance services - Creating new tokens. Category 1 requires VARA approval for each token; Category 2 needs a licensed intermediary.

Capital Requirements: What You Need to Know

VARA sets strict capital requirements based on your service type. You can't start without meeting these minimums. Here's a quick reference:

If you offer multiple services, the capital adds up. For example, combining Broker-Dealer and Custody services requires AED 5 million total. This ensures your business has enough financial muscle to handle risks and protect clients.

Fees and Ongoing Costs

Getting a VARA license isn't just about capital. You also pay fees:

• Application fee: AED 40,000 to AED 100,000, depending on your service scope.
• Annual supervision fee: Between AED 80,000 and AED 200,000 for ongoing monitoring.

Plus, you'll need legal help, compliance software, and security audits. These costs can add up quickly, but they're necessary for staying compliant. Think of it as an investment in your business's future.

Operational Requirements for VARA Approval

VARA expects more than just money. You need solid systems in place. Here's what you'll need:

• Be a legal entity registered in Dubai.
• Have a detailed business plan covering your operations, risks, and finances.
• Implement strong cybersecurity measures like encryption and regular audits.
• Get insurance for cyber threats and asset losses.
• Keep detailed records of all transactions and client interactions.

These aren't just paperwork-they're the backbone of a trustworthy crypto business. Without them, VARA won't approve your application.

AML/CFT Rules: Your Compliance Must-Haves

Anti-money laundering (AML) and counter-terrorism financing (CFT) rules are non-negotiable. VARA requires:

• Know Your Customer (KYC) checks for all users. This means verifying identities and sources of funds.
• Real-time transaction monitoring to spot suspicious activity.
• Reporting any red flags to authorities immediately.

For example, if a user tries to deposit $500,000 in Bitcoin without clear sources, your system should flag it. Automated KYC tools can help, but you still need trained staff to review cases. Skipping these steps risks heavy fines or license revocation.

Key Restrictions You Can't Ignore

VARA has banned certain high-risk activities. Most notably:

• Privacy coins like Monero and Zcash are completely prohibited. They're too anonymous for VARA's standards.
• All marketing materials must get VARA's approval before going public. No misleading ads allowed.
• Strict IT security rules require regular external audits and certifications.

These rules protect Dubai's reputation. If you ignore them, you'll face serious consequences.

How VARA Compares to Other UAE Regulators

Dubai isn't the only place with crypto rules. Here's how VARA stacks up:

• DFSA (Dubai Financial Services Authority) regulates crypto in the DIFC free zone. It's more focused on traditional finance integration.
• FSRA (Abu Dhabi Global Market) offers a different regulatory path, often used for certain crypto activities.
• SCA and Central Bank handle federal-level regulation outside free zones.

VARA is the most comprehensive for crypto-specific services in Dubai. If you're not in DIFC, VARA is your go-to regulator.

Common Challenges and Pro Tips

Many companies struggle with VARA's requirements. Here's what we've seen:

• High costs: Capital and fees can be steep, especially for small businesses.
• Complex paperwork: Business plans and compliance systems take time to build.
• Fast-changing rules: VARA updates guidelines regularly.

Pro tips: Hire a local compliance expert. Start early-applications can take 6-12 months. Use automated tools for KYC and monitoring. And always keep records organized. Companies that do this pass VARA reviews faster.

Frequently Asked Questions