VARA Exchange Services License: What you Need to Know

The Dubai Virtual Assets Regulatory Authority (“VARA”) serves as the dedicated regulator overseeing Virtual Asset Service Providers (“VASPs”) across Dubai. Its mandate is to create a secure, transparent, and sustainable environment for virtual asset activities, ensuring that innovation is balanced with investor protection and financial stability.

1. What is an Exchange Service?

A Virtual Asset Exchange Service is a platform where users can buy, sell, or convert virtual assets, whether against fiat currency or other virtual assets. These services may match orders between buyers and sellers, execute trades or conversions, or maintain an order book to facilitate trading activity.

Because exchanges handle client assets and process high-value transactions, VARA regulates exchange operators with strict licensing and ongoing compliance requirements to ensure market integrity, consumer protection, and financial stability.

2. Now what is the Exchange Services License?

It is VARA’s core approval for companies operating virtual asset trading platforms in Dubai. Any company offering virtual asset trading services must secure the Exchange Services License from VARA, unless the business operates within the Dubai International Financial Centre (“DIFC”), which is separately regulated.

More than a regulatory formality, the Exchange Services License demonstrates that a company has met VARA’s expectations for governance, capital adequacy, cybersecurity, risk management, and investor protection.

3. What are the key licensing requirements?

Governance and Fit-and-Proper Management

VARA places significant emphasis on leadership quality. Founders, directors, and senior management must meet fit-and-proper standards, demonstrating integrity, competence, and the ability to manage a regulated virtual asset business responsibly.

Exchange VASPs must demonstrate strong and transparent governance. This includes maintaining a balanced Board, consisting of both executive and non-executive directors, with at least one fully independent director, with independent oversight, establishing key committees such as audit and remuneration, and ensuring that the Board meets regularly to supervise management and oversee core operations.

Policies, Procedures & Public Disclosure

Every Exchange VASP must maintain comprehensive internal policies that govern the full lifecycle of its operations.

a) What does these internal Policies and Procedures cover?

- Market integrity, including detection and prevention of manipulation and abusive trading practices.

- Client access and withdrawals, ensuring users can retrieve their assets even during high-volatility periods.

- Settlement and clearing, with transparent rules for accurate execution and asset delivery.

- Pricing methodology, using reliable data and clearly explained models.

- Clear Code of Conduct for all users of its platform.

b) What about Public Disclosures?

VARA requires exchanges to publish clear, accessible information on their website, including:

- how conflicts of interest are managed,

- data-protection and complaints-handling processes,

- custody arrangements and how client assets are safeguarded,

- pricing methodologies,

- and detailed information on each listed virtual asset, including smart-contract audit status, circulating supply, market data, and risk indicators.

These disclosures ensure that clients understand exactly how the exchange operates and how their assets are protected.

Business Model Clarity & Operational Transparency

Applicants must provide a complete, well-documented overview of how the exchange operates. VARA requires clarity on:

. how liquidity is sourced and maintained,

. whether the exchange operates an order book, matching engine or both,

. how custody and asset segregation are handled,

. how the exchange manages market, liquidity, and operational risks,

. and which third-party service providers (if any) are involved.

Compliance Framework & AML Standards

Exchanges operate in a high-risk environment, and VARA requires a comprehensive compliance framework that aligns with UAE AML/CFT laws.

Trading Venue Conduct & Market Integrity

VARA requires exchanges to run their trading platforms in a fair, clear, and well-controlled way. Every exchange must set out simple trading rules that all users accept before they can trade. The exchange must enforce these rules and act quickly if a user behaves in a way that harms the market.

Exchanges must also monitor trading activity at all times so they can spot unusual or suspicious behavior and report it to VARA immediately. This helps prevent manipulation and keeps the market stable. Fees must be transparent and applied equally to all users so that no one gains an unfair advantage.

After a trade is executed, the exchange must complete settlement within 24 hours unless there is a genuine external issue that causes a delay.

Capital Requirements

The minimum paid-up capital depends on how client assets are held.

If the company uses a VARA-licensed Custody Provider, or if VARA specifically approves the lower threshold, the requirement is the higher of AED 800,000 or 15% of fixed annual overheads.

If the company does not use a VARA-licensed Custody Provider, or if it holds client assets itself without special approval from VARA, the requirement increases to the higher of AED 1,500,000 or 25% of fixed annual overheads.

VARA requires all VASPs to maintain their paid-up capital in secure, regulator-approved forms. At all times, the capital must be held in one of the following ways: Capital must be maintained in a VARA-approved form such as a UAE bank trust account, a surety bond, or another arrangement approved by the regulator.

Appliable Fees

The application fee for the Exchange Services License is AED 100,000, with an annual supervision fee of AED 200,000.

4. What about VARA Margin Trading Rules?

Margin trading is one of the most tightly regulated areas under VARA and is not automatically included in the Exchange License.

What Is Margin Trading?

Margin trading allows clients to amplify their positions by borrowing funds or virtual assets from the exchange, using approved collateral. While it increases potential returns, it also heightens risk, making strict controls essential.

It is always applicable? No.

Margin Trading Rules include:

. authorization only by explicit approval from VARA;

. strict collateral and risk-management standards;

. detailed suitability assessments for every client;

. segregated and monitored margin accounts;

. mandatory early-warning systems and liquidation protocols; and

. a clear Margin Trading Agreement outlining risks, fees, and liquidation rules.

How Rasma Legal Can Support You

Rasma Legal helps businesses navigate every stage of the VARA licensing and compliance journey. Our team has successfully worked with VARA across multiple licensing categories and understands the practical and regulatory requirements for operating in Dubai’s fast-evolving digital or crypto asset market. Whether you are applying for a VARA license or strengthening your ongoing compliance, we provide the strategic guidance and hands-on support you need to build a secure, compliant, and scalable VA business.