Dubai's VARA Updates Regulatory Guidelines for Licensed Crypto Companies

Dubai's Virtual Assets Regulatory Authority (VARA) has issued updated regulatory guidelines for licensed crypto companies.

Dubai's Virtual Assets Regulatory Authority (VARA) has issued updated regulatory guidelines for licensed crypto companies, granting firms until June 19 to comply with the new requirements.

The regulator announced the release of Version 2.0 of its activity-based Rulebooks on May 19, introducing better controls to enhance market integrity and risk oversight. The revised framework deepens regulations around margin trading and token distribution services, and also compliance requirements across all licensed activities.

"In line with global regulatory best practices, a 30-day transition period has been granted to all impacted virtual asset service providers, with full compliance required by 19 June 2025," stated VARA in its announcement. Regulatory team members will be working directly with licensed entities during the transition period to allow implementation of the updated rules.

The eight regulated activities - advisory, broker-dealer, custody, exchange, lending and borrowing, virtual asset management and investment, virtual asset transfer and settlement services, and virtual asset issuance - are all covered by the updated framework.

The revisions also align risk management and disclosure obligations where activities overlap, especially in brokerage, custody, and exchange services. This alignment aims to remove contradictory requirements that previously created compliance challenges for firms operating across multiple service categories.

One key focus area in the updated rulebooks is margin trading, where VARA has tightened leverage thresholds, mandated clearer collateralization standards, and enhanced monitoring obligations for VASPs offering margin trading services. These measures align with similar restrictions implemented by global regulators concerned about excessive leverage in cryptocurrency markets, creating systemic risks.

The updated framework introduces a dedicated section on token distribution that establishes licensing prerequisites, investor protection measures, and marketing restrictions for crypto token offerings. The VARA spokesperson highlighted new marketing restrictions, especially for "retail-facing offers."

This suggests the regulator is taking steps to shield less sophisticated investors from high-risk token offerings. Dubai continues to position itself as a leading crypto hub and, at the same time, implement increasingly comprehensive regulations.