The Virtual Assets Regulatory Authority (VARA), the body in charge of overseeing cryptocurrency regulations within Dubai, has announced new rules for virtual asset service providers (VASPs) operating within the emirate. VASPs refer to companies that offer services related to virtual assets.

According to Irina Heaver, a UAE-based crypto and blockchain lawyer, VARA has issued its “Full Market Product Regulations.” These regulations include four mandatory rulebooks and activity-specific rulebooks that establish the rules for operating VASPs. Irina Heaver is quoted as saying that VARA has issued its “Complete Market Product Regulations”. Only market players located within Dubai are subject to the laws; those operating within the Dubai International Financial Center (DIFC), which is a free zone with its own independent regulatory agency, are excluded.

In addition, the Dubai regulator stressed that all market players, regardless of whether or not they have a VARA license, must comply with the legislation on marketing, advertising and promotional restrictions. Violators will receive a fee ranging from Dh20,000 to Dh200,000 (US$5,500 to US$55,000), while repeat offenders face the possibility of penalties as high as Dh500,000 (US$135,000).

In addition, the rules provide guidance on a variety of other topics, such as the distribution of virtual assets. According to Heaver, the biggest takeaways from the latest VARA update are that it is illegal to issue privacy coins in Dubai and that merchants whose trading capital exceeds $250 million are required to register with VARA. Other key points include the following:

In addition, the law establishes the costs for advisory services, licensing and annual monitoring of custody services, stock exchanges, brokerage firms and loans. Costs can vary between 40,000 and 200,000 dirhams ($11,000 to $55,000) and are expressed in the above currency.

“Regulatory clarity is tremendously beneficial to the business community. Consumers, investors and the Emirate of Dubai will benefit from this development. The restrictions have been long anticipated and are generally welcomed.

Heaver added that while VARA has broad authority to interpret the rules and apply them as it sees fit, he believes and trusts that such interpretation and application will be in line with “Dubai’s spirit of leadership,” which has into account business acumen and fostering entrepreneurial endeavors.