Dubai’s Vara issues updated crypto rulebooks: Dubai’s Virtual Assets Regulatory Authority (Vara) has released the second edition of its rulebook governing virtual asset (VA) activities, aiming to tighten oversight and harmonize compliance standards across the emirate’s digital asset ecosystem, according to a pressrelease. We break down the key regulatory changes, along with the expected market impact, below.

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Tighter rules and unified standards: The updated framework introduces stricter controls on margin trading, token distribution, and collateral wallet arrangements. It also standardizes compliance requirements across advisory, custody, exchange, lending, borrowing, and investment services — a shift designed to “promote greater market discipline, risk transparency, and operational resilience” across the VA ecosystem, Mazen Boustany, partner at Baker McKenzie in the UAE, told EnterpriseAM UAE.

Licenses for margin trading + custody services: Virtual asset service providers (VASPs) may now offer margin trading services only with explicit authorization from Vara, and that approval must be clearly stated in their license. Firms must also ensure they maintain sufficient assets to fully cover client obligations at all times. PLUS: Vara will also only allow custody services to offer collateral wallet services with its explicit approval.

Stricter oversight over non-Vara licensed players: Non-Vara license crypto players cannot distribute stablecoins or “asset-referenced tokens” — which are pegged to real-world assets — and can only distribute other tokens — like non-transferable or redeemable closed-loop tokens — through a Vara-licensed distributor like a broker-dealer.

Transition period: All VASPs operating in Dubai must bring their operations in line with the updated rulebooks by 19 June. Vara has set a 30-day transition period and will provide entity-specific guidance to support licensed firms during implementation, it said in its statement.

The market impact? Bigger compliance burdens, but stronger investor confidence: While the updated rulebooks will likely raise the compliance burden on regulated entities, Boustany says the long-term benefits are clear — enhancing the credibility of both Vara as a regulator and the VASPs it licenses. “This will assuage investors and make them confident in dealing with Vara regulated VASPs [...] at a time when VAs are making big forays as an asset class, [especially] after the relaxing of US regulations in relation to crypto-assets under the Trump administration,” he added.

REMEMBER- Vara’s updated rulebooks come amid a broader infrastructure push to formalize crypto adoption in the UAE. Dubai Finance recently signed an MoU with Crypto.com to enable stablecoin payments for government services, while the company is also piloting crypto payments at Emarat fuel stations — a first for the MENA region. At the federal level, the Central Bank of the UAE recently greenlit AE Coin, the UAE’s first AED-pegged stablecoin. Other issuers — including Phoenix Group, Tether, and First Abu Dhabi Bank, ADQ, and International Holding Company — are also exploring AED-backed stablecoins backed by UAE-based reserves pending final regulatory clearance.

ADGM’s Financial Services Regulatory Authority also issued a new regulatory framework for stablecoins in December, setting out detailed requirements for issuance, reserves, redemption rights, and disclosures.

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