Dubai's Virtual Assets Regulatory Authority (VARA) Unveils Updated Cryptocurrency Policies to Enhance Risk Management and Investor Protection.

VARA has announced significant updates to its cryptocurrency policies, aiming to enhance risk management and bolster investor protection.

Dubai's Virtual Assets Regulatory Authority (VARA) has introduced significant updates to its cryptocurrency policies, aiming to enhance risk management practices and strengthen investor protection measures. The revised regulations, which will impose stricter controls on margin trading and token distribution services, are part of broader efforts to foster a more scalable and sustainable crypto ecosystem in the emirate.

The updates, which come into effect on May 19, 1 will focus on increasing clarity in compliance expectations across all licensed crypto and Web3 activities. Service providers engaged in crypto advisory and custody services will need to align their operations with these new guidelines, while exchanges, broker-dealers, and lending services will be required to comply with the revamped regulations.

“These updates are fundamental to enabling a responsible and scalable ecosystem for virtual assets in Dubai,” said Ruben Bombardi, VARA's General Counsel and Head of Regulatory Enablement. “They underscore our commitment to ensuring that all market participants maintain the highest standards of operational integrity and investor safety.”

The updated VARA regulations also include the implementation of a regular client risk assessment regime, to be conducted every three months by virtual asset service providers. As part of the identity verification process, clients will be required to provide their names, nationalities, addresses, birthplaces, and employer details.

“These updates are part of broader efforts to foster greater market discipline, enhance risk transparency, and improve operational resilience within Dubai's virtual asset landscape,” a VARA spokesperson added. “We are committed to mitigating potential risks and protecting investors from fraudulent activities.”

In the coming days, VARA officials will be engaging with the licensed crypto entities to guide them through the updated operational guidelines. The agency's Supervision Team will offer tailored advice specific to the activities of each entity. To facilitate a smooth transition, VARA has established a 30-day compliance window, with a deadline set for June 19.

This proactive approach reflects the authority's determination to ensure that all crypto businesses operate within the new regulatory framework.

Recently, VARA has expressed concern over the rise in crypto-related fraudulent activities, which pose significant financial risks to investors. Earlier this year, the agency issued a warning to investors regarding the speculative nature of memecoins, urging them to exercise caution in their investment decisions.

The regulatory body had previously revised its crypto marketing policies in September 2024, highlighting its ongoing efforts to adapt to the evolving landscape of the cryptocurrency industry.

Furthermore, Dubai's Department of Finance partnered with Crypto.com to enable crypto payments for government services, showcasing the emirate's commitment to integrating crypto and blockchain technologies with public institutions. This partnership is part of broader initiatives to foster innovation and position Dubai as a global Web3 hub.