The VARA Licensing Process: What you Need to Know

The Dubai Virtual Assets Regulatory Authority (“VARA”) has established a structured two-stage licensing framework for entities seeking authorization to conduct virtual asset activities.

STAGE 1

STAGE 2

The first stage comprises the initial application, after which the successful applicant would receive an “Approval To Incorporate (“ATI”), while the second stage includes a comprehensive review and, ultimately, the full licensing.
Understanding the procedural flow and requirements at each stage is essential for applicants planning their regulatory pathway.

Stage One: Approval To Incorporate (ATI)

Step 1: Obtain Initial Approval from Incorporation Jurisdiction

Before starting the licensing process, applicants must first obtain the necessary initial approval from the relevant incorporation authority in their chosen jurisdiction. This may be the Department of Economy and Tourism (DET) for mainland entities or the respective free zone authority for free zone establishments such as DMCC, DWTC, or other Dubai free zones. At this stage, applicants are generally required to provide fundamental corporate documentation, proposed business activities, details regarding ownership and management, and any additional information requested by the authority.

The incorporation authority will then issue the Initial Approval, which confirms that the applicant is eligible to proceed with the incorporation process within the jurisdiction and that the proposed virtual asset activities are permissible under the local licensing framework. While the entity remains non-operational at this stage, obtaining this approval is a prerequisite for advancing to the next steps of the licensing process.

It is important to note that the Initial Approval is typically valid for 60 days and is conditional upon completing the lease agreement, submitting required documentation for local authority review, and making the necessary payments.

Step 2: Submit the Initial Disclosure Questionnaire

Along with the Initial Approval, the incorporation authority will provide the applicant with an Initial Disclosure Questionnaire (IDQ), typically in the form of an online form, to be submitted to VARA.

The IDQ requires disclosure of fundamental information including but not limited to the proposed virtual asset activities to be conducted, the business model, details of shareholders and ultimate beneficial owners, and senior management information.

The applicant will also be required to submit a Business Plan at this stage in addition to other supporting documents.

Step 3: VARA Preliminary Assessment

Further to the below, VARA conducts an initial assessment of the submission. This preliminary review confirms completeness of the questionnaire, verifies that the proposed activities fall within VARA's regulatory scope, and conducts basic verification of the entity's proposed structure.

VARA may request clarification or additional information during this stage if the IDQ contains gaps or ambiguities.

Step 4: Payment of Initial Fees

Once VARA determines the IDQ to be substantially complete and acceptable, the Authority issues an invoice for initial fees, typically amounting to 50% of the total license application fee. These fees vary depending on the regulated virtual asset activity or activities for which authorization is sought.

Payment of the initial fees is mandatory. Applicants must complete payment in accordance with VARA's payment instructions within the timeframe specified.

Step 5: Obtain the ATI

Upon receipt and verification of payment, VARA issues the ATI, formally confirming that the applicant has passed the preliminary screening and is authorized to proceed to the preparation stage.

The ATI allows the applicant to:

The ATI does not authorize the entity to conduct any virtual asset activities in or from Dubai. This authorization remains strictly limited to allowing the entity to undertake preparation activities necessary for the second stage. The applicant is also not allowed to announce that it has received an ATI.

The duration of the first stage depends on the readiness of the applicant and the completeness of the IDQ and required documents. VARA may revert with more requirements after the initial submission, and will typically issue the ATI letter within one to two months from the submission of all required documents.

Stage Two: Full License

Step 6: Compile Application Documentation

Following completion of operational setup and preparation, VARA will share a list of requirements to be submitted by the applicant, including extensive documentation and detailed information related to the business model, technology, shareholders, UBOs, staff, and other details. VARA will also set a deadline to submit these documents, which will typically be around three months from the obtention of the ATI.

VARA will also require the applicant to submit their internal policies. These policies must be tailored to VARA’s requirements and fully compliant with their regulations, rulebooks and guidelines. These policies will relate to:

Applicants must ensure all documentation is complete, accurate, and properly formatted in accordance with VARA's submission requirements to avoid delays.

Step 7: Initial Submission and VARA Review

The applicant formally submits the complete full application package to VARA, with detailed replies to each requirement and all the supporting documentation.

This submission represents the full formal application for the Virtual Asset Service Provider license and triggers VARA's detailed assessment procedures.

Upon receipt of the initial application submission, VARA initiates an extensive review and assessment process. This stage typically takes around a month, though timelines depend on VARA’s responsiveness and operational capacity.

During this phase, VARA conducts a detailed examination of all submitted materials, assesses the applicant's readiness to conduct virtual asset activities safely and in compliance with regulatory requirements, and evaluates the soundness of the proposed business model and operational infrastructure.

Step 8: VARA Queries and Additional Requests

After the review, VARA will provide a gap list identifying any missing items, additional requirements, or points needing clarification. The applicant will then submit the required information and updated documentation. This back-and-forth process will continue, with VARA sending revised gap lists until all requirements are fully satisfied.

Applicants must respond comprehensively and promptly to all queries within the timeframe specified by VARA, typically less than a month. Responses should be thorough, addressing the substance of each query and providing requested evidence or clarification.

During this stage, VARA may impose additional requirements or operational conditions that must be satisfied before license issuance. These conditions might include implementation of specific compliance procedures, recruitment of additional key personnel, modifications to proposed business model or operational structure, or provision of specific undertakings or agreements.

Step 9: Payment of Remaining Fees

Upon substantial completion of VARA's review and confirmation that all requirements have been satisfied, VARA issues an invoice for the remaining portion of the license application fee and the first year's supervision fees.

Payment of these remaining fees is mandatory before VARA issues the final license.

Step 10: Obtain Virtual Asset Service Provider License

Following payment of all outstanding fees and confirmation of compliance with all conditions, VARA issues the Virtual Asset Service Provider (VASP) License, formally authorizing the entity to conduct the specified virtual asset activities.

A VASP License may be issued subject to operational conditions that the entity must fulfill on an ongoing basis to maintain authorization. These conditions must be explicitly acknowledged and documented by the licensee.

Timeline Summary

The complete licensing pathway from initial submission to license issuance typically spans six to twelve months, though actual timelines vary based on application quality, responsiveness to VARA inquiries, and regulatory workload.

Applications with complete, well-organized documentation and responsive applicants typically progress toward the faster end of this timeline, while complex applications or those requiring multiple clarification rounds may extend beyond twelve months.

Conclusion

The VARA licensing process follows a clearly defined procedural pathway comprising multiple steps distributed across two stages. Entities seeking VARA authorization must successfully navigate from initial disclosure through comprehensive review and ultimate license issuance. Understanding each procedural step, completing required documentation thoroughly, and maintaining responsive engagement with the regulatory authority are essential to achieving successful licensing within the typical six to twelve-month timeframe. The procedural clarity and structured framework, while demanding, provide applicants with visibility into requirements and timelines necessary for effective planning and execution of the licensing process.

How RASMA Legal Can Help:

RASMA Legal supports applicants throughout the licensing journey by:
Our expertise ensures your application is complete, compliant, and strategically positioned for timely approval.