VARA’s FMP licence rollout ‘firm footing’ for growth of UAE virtual assets

VARA began supervising Dubai’s virtual asset industry earlier this year, inviting stakeholders to discuss the scope of the virtual asset framework applicable to the industry. It also began granting ‘provisional’ licenses to virtual asset service providers (VASPs) applicants which allowed them to get going on establishing offices, obtaining visas for employees and opening bank accounts. Provisional license holders are not permitted to conduct any customer-facing business activities. 

Since then, VARA has rolled out its ‘minimum viable product’ (MVP) licence regime. The MVP licence allows participants to undertake their activities within an agreed limited scope and specifically to their authorised market segment. To date, a number of major virtual asset firms have successfully obtained MVP licenses.

Tom Bicknell of Pinsent Masons said: “Encompassing the learnings from its MVP licensing stage and widespread industry engagement, VARA’s introduction of the FMP licence will serve as a firm footing for the next stage of growth for the UAE’s leading virtual asset industry.”

Once the rollout begins, MVP licence holders and other VASPs will have to apply for an FMP licence to undertake their activities in the market. The FMP regime is structured around ensuring that anti-money laundering and combating the financing of terrorism (AML/CFT) compliance standards are met in accordance with the Financial Action Taskforce’s recommendations for VASPs. VARA said the FMP regime will also apply ongoing internal controls, corporate governance and conduct of business rules appropriate to the risk profile of the applicant.

Bicknell said: “VARA is undertaking engagement and consultation with market participants as part of its development of the FMP framework with a version of the framework expected to be released shortly. It is worth noting that VARA has made clear that, notwithstanding the release of the FMP framework, the regulator will seek to monitor global trends of the virtual industry and where appropriate issue further rules and guidance.”