Dubai is emerging as a global crypto hub, and a big reason for this is its forward-thinking crypto regulator, VARA (Virtual Assets Regulatory Authority), responsible for regulating and overseeing the provision, use and exchange of virtual assets.
The decision to introduce VARA is a strategic one, as the emirate looks to attract serious crypto players, build its digital economy (targeted to reach $140 billion by 2031), and reinforce the UAE’s status in this sector.
For crypto investors in Dubai and beyond, understanding VARA’s role is key to navigating Dubai’s crypto market.
In March 2022, Dubai set up VARA with a clear goal: to regulate the crypto industry in a way that protects investors while promoting innovation.
By being a dedicated agency for crypto, VARA fills the gap where traditional financial regulators might not have specific frameworks for digital assets. It serves as a “transparent and trusted” authority for the emerging virtual asset market, bringing Dubai’s crypto activities under unified oversight rather than ad-hoc or fragmented regulation
Established under Dubai Law No. 4 of 2022, VARA is the first regulator in the world exclusively for virtual assets. It was a characteristically bold move by the Dubai government, designed to make Dubai a safe and attractive place for crypto companies and investors.
As stated in the enforcement section of their website, the “primary responsibility for regulatory compliance falls ultimately, with VASPs (Virtual Asset Service Providers)”. The goal of VARA is to provide oversight and in instances of non-compliance, to take enforcement action.
VARA’s first high-profile enforcement action came in 2023 and made waves globally. OPNX, an exchange created by the infamous founders of collapsed hedge fund Three Arrows Capital, launched without proper VARA licensing.
VARA issued public warnings in April 2023 that OPNX was not authorised, yet the platform continued advertising and operating targeted at Dubai clients. In August 2023, VARA hit OPNX with a heavy fine – 10 million AED (about USD $2.7 million) against the company for violating laws. This enforcement showed that VARA is serious about cracking down on unlicensed activity and misleading promotion.
Under VARA’s framework, any Virtual Asset Service Provider (VASP) operating in or from Dubai must obtain a VARA license before commencing business. Covered activities include exchanges, custody, transfers, advisory services, and more, ensuring only vetted, compliant operators serve the market.
This means that to operate legally in Dubai, crypto businesses must go through VARA’s licensing process. This ensures that only well-prepared, qualified players enter the market, which ultimately protects investors and the reputation of Dubai as a crypto hub. Examples of exchange and custody services currently licenced under VARA include Bitpanda Broker MENA DMCC, HashKey and LCT Global.
The licensing process involves two stages, designed to thoroughly vet firms before they fully launch. This includes an initial approval (Stage 1: “Approval to Incorporate”) followed by the full VASP license (Stage 2). The staged approach ensures a company sets up properly (with local incorporation, offices, initial compliance programs) before VARA grants permission to offer services.
Dubai is rapidly transitioning from an ambitious regional crypto hub to a global one. At the heart of this evolution is VARA’s regulatory framework, which delivers something the digital asset industry has long lacked: clarity.
For crypto investors and institutions alike, the message is clear. Dubai now operates with a well-defined rulebook that outlines what activities are permitted, under what conditions, and with which safeguards. This removes much of the ambiguity that has historically surrounded crypto markets and replaces it with a structured, transparent operating environment.
Crucially, investor protections are built directly into the framework. Service providers must meet strict compliance and operational standards, and VARA itself acts as a single, visible authority responsible for oversight and enforcement. The result is a material reduction in counterparty risk and a decisive step away from the “Wild West” reputation that has plagued parts of the crypto ecosystem.
If Dubai maintains this trajectory, it is well positioned to capture a material share of global crypto activity. Just as New York and London anchor traditional finance, Dubai has the potential to become the crypto capital of the Middle East and South Asia.
CoinCover provides institutional-grade protection for digital assets, helping crypto businesses and investors operate securely within regulated environments like Dubai. Our solutions are designed to meet the expectations of regulators, partners, and end customers. Get in touch with a member of our team today.