Dubai regulator VARA shows how the authorities and the market work – Deputy Chairman

The Virtual Assets Regulatory Authority (VARA) is one of the first regulatory bodies to release comprehensive crypto assets regulations to promote crypto-related activities in Dubai. Founded in March 2022, VARA was created to promote the Emirates as a regional and international hub for virtual assets and related services.

VARA issued a comprehensive regulatory framework for virtual asset service providers (VASPs) in February. The regulatory framework includes four mandatory regulations and activity-specific handbooks for VASPs. The rules only apply to VASPs operating in the Dubai region. The VARA framework also includes a handbook for marketing, advertising and promotions by VASPs.

Cointelegraph spoke to Deepa Raja Carbon, Managing Director and Vice-Chairman at VARA, to understand the regulatory bodies' views on the startup's technology and the critical challenges faced in establishing a framework for crypto assets. Asked about VARA's approach to digital assets and what made it successful compared to other global regulators, Carbone said VARA's unique proposition lies in its scope, collaborative ethos and ability to respond quickly to market needs.

As Carbone explains, VARA follows an ethos based on the philosophy that “ultimately elevates and measures the entire ecosystem, rather than a minimum standard baseline to find the highest assemblage point as a universal boundary.”

“VARA is setting a precedent for how regulators can work together with the market, dynamically adjusting to its soul to shape a strong, robust and responsive regulatory environment: the 3R-Pyramid. It is this speed, collaboration and unwavering commitment to quality that defines our growth and, thus, a new era of borderless economic We believe that opportunism leads to marginal, and therefore minimal, cross-border risks.

When asked about the key challenges faced by VARA in establishing these virtual asset frameworks, Carbone stated that creating guidelines for start-up industries such as virtual assets is undeniably challenging. The director added that the regulatory body has scrutinized the existing frameworks and taken note of the lessons learned by other regulatory bodies.

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Carbone told Cointelegraph that the regulatory body will follow an inherently consultative and collaborative approach involving various stakeholders, from industry leaders and innovators to peer regulators and legislators, as well as the general public.

“We have ensured that our guidelines are not only comprehensive but aligned with market needs and realities. Working with Dubai-based entities such as DET and DFZC for the Mainland and various free zones, we have developed a unified and flexible framework.

As many countries in the Middle East and Asia look to attract digital asset businesses, VARA's crypto regulations aim to make Dubai one of the industry's hot spots. Hong Kong has made major strides in crypto regulation in 2023, issuing various regulatory guidelines for crypto platforms that serve retail and institutional clients.

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