VARA Launches Full Market Product Regulations [FMP]

3 min readFeb 9, 2023

WHAT IS VARA

VARA is the Virtual Assets Regulations Authority. VARA’s regime is founded on the principles of enforcing:

Responsible market participation backed by a future-proofed and responsive regulatory framework that remains technology agnostic; that collectively deliver
(a) socio-economic stability; (b) robust consumer protection; and © jurisdictional resilience.

The 4-stage licensing process allows applicants to progress through a tiered approval gateway starting with (1) Provisional permit; graduating to a 2-step [(2) Preparatory + (3) Operating] Minimum Viable Product (MVP) licence; and culminating at the (4) Full Market Product (FMP) licence which will only take effect after the regulations have been tested within the regime. Every Virtual Asset Service Provider [VASP] must go through all 4 stages in this current environment, wherein VARA expects to evaluate, observe, and only then authorise suitably qualified entities to undertake any market servicing activities under its licensing regime.

So far, the VARA licences issued have only been either at Stage Gate (1) Provisional or (2) MVP-Preparatory — to enable VASPs to fulfil all pre-conditions, and undertake readiness steps eg. establish offices, onboard employees with work visas, secure domestic bank account etc. prior to being in a position to undertake any market operations. As such, no VARA licensee has, to date, been awarded an MVP-Operating permit, to provide regulated services or activities to their specifically authorised market segment(s) in the Emirate. Any information or representation to the contrary, is inaccurate and misleading.

Each VASP that is awarded an MVP licence must comply with the [MVP Licence Conditions Document] issued by VARA, and strictly adhere to the licensing conditions outlined in the appended letter. One of the MVP conditions is that VA activities during this phase may only be provided to qualified and/or institutional investor segments. Mass retail consumers are strictly prohibited until the Stage Gate (4) FMP licence approval has been secured. [Virtual Assets and Related Activities Regulations 2023] will stipulate relevant licensing conditions and requirements. VARA’s full market regulations when published, will specifically focus on securely enabling borderless economic opportunity across the global VA industry, protecting investors and market participants, backed by active enforcement of all regulatory requirements beyond security and cross-border compliance including those pertaining to custody and segregation of client money; prudential requirements (viz. insurance and liquidity cover); FATF compliance, market manipulation and/or abuse prevention.

REGULATION

VARA is the world’s first, tailor-made Virtual Asset regime, and as such, its Full Market Product (FMP) Regulations are designed to specifically cater for the provision of permissible activities and services to customers and investors, from the Emirate of Dubai. With bespoke rules and guidelines designed to provide clarity, assure certainty, and mitigate market risks, VARA seeks to develop a model framework for global economic sustainability within an innovation-centric environment that is truly borderless, technology agnostic, and future-focused.

FULL MARKET PRODUCT

Published on: 7 February 2023 pursuant to the final approval of the Board of Directors, in accordance with Law No. (4) of 2022 Regulating Virtual Assets in the Emirate of Dubai.

This regulation is divided into 4 categories of Rulebooks [I], with 7 Activity Specific Rulebooks [II]. More details on our Lexyom Founders Telegram Group, it’s an Invite Only Group where you can ask me stuff regarding Virtual Assets Regulation.