Dubai's crypto regulator Virtual Asset Regulatory Authority (VARA) has updated its rulebook for digital asset trading.

The emirati regulator has introduced greater leverage controls and collateralization requirements through provisions in its Broker-Deal and Exchange Rulebooks.

Dubai's crypto regulator Virtual Asset Regulatory Authority (VARA) has updated its rulebook for digital asset trading.

The emirati regulator has introduced greater leverage controls and collateralization requirements through provisions in its Broker-Deal and Exchange Rulebooks. This will help VARA's rules to align with global risk standards, the regulator said in an emailed announcement on Monday.

Leverage limits and requirements for brokers-deal will depend on the category of digital asset being traded, the regulator said. A minimum 5% margin requirement will apply for Category 1 digital assets, while Category 3 digital assets will require a minimum 20% margin.

Category 1 digital assets are defined as those that have been approved by a relevant regulator in the country or region of origin for retail use. Category 3 digital assets are defined as those that have not been approved by a regulator and are deemed to pose a high risk to investors.

In addition, brokers-deal will need to provide a full and complete analysis of the digital asset to investors. This analysis will include a statement of the digital asset's economic, technical and legal characteristics.

World Bank researchers have previously warned that crypto poses an "uncharted territory" for regulators due to the cross-border nature of digital assets. A report by the institution in December 2022 said that rapid innovation in the digital asset sector has outpaced the development of a global regulatory framework.

VARA has also introduced sections of its rulebook to properly oversee areas of the crypto industry that were previously lightly regulated, such as broker-dealers and wallets.

The rules previously laid out by VARA have helped establish the city as a crypto hub, winning praise from crypto companies for being reasonably clear in their requirements to operate there. Major exchanges such as Binance, Crypto.com and OKX have all won approvals under VARA.

VARA is now taking these rules and upgrading them to reflect a more mature framework that it says incorporates real-world licensing experience and international best practices.

"These rulebook updates reinforce the foundations of a responsible, scalable ecosystem,” said Ruben Bombardi, General Counsel and Head of Regulatory Enablement at VARA,.