Starting a crypto business in Dubai isn’t just about setting up a website or launching a token. If you want to operate legally under Dubai’s new rules, you’re dealing with VARA-the Virtual Assets Regulatory Authority. This isn’t a suggestion. It’s the law. And if you skip this step, you’re not just risking fines-you’re risking your entire operation being shut down.
What Is VARA, and Why Does It Matter?
VARA was created in 2022 to be the only official regulator for virtual assets in Dubai. That means if you’re offering crypto services inside Dubai (not in DIFC or ADGM), you need a VARA license. No exceptions. This includes exchanges, wallet providers, custody services, and even companies issuing NFTs or tokens. VARA doesn’t just oversee trading-it controls everything from how you verify customers to how you store digital assets. Unlike other places where crypto rules are vague or outdated, VARA’s framework is modern, detailed, and built for real-world use. It covers DeFi protocols, tokenized real estate, AI-driven trading bots, and more. If your business touches virtual assets in any way, VARA has rules for you.The Six Types of VARA Licenses You Can Apply For
You can’t just get one blanket license. VARA breaks down services into six specific categories, and you need approval for each one you plan to offer:- Exchange services - Running a platform where users trade crypto for crypto or crypto for fiat.
- Broker-dealer services - Buying or selling crypto on behalf of clients, either with fiat or between different digital assets.
- Custody services - Holding clients’ crypto assets securely. This requires insurance and advanced security systems.
- Transfer services - Enabling the movement of crypto between wallets or accounts for customers.
- Wallet provision services - Offering digital wallets to users, whether hot or cold storage.
- Token issuance - Creating and distributing new tokens. This has two subcategories: Category 1 (direct issuance with VARA approval per token) and Category 2 (must go through a licensed intermediary).
Many companies start with just one or two of these. But if you want to offer multiple services, you’ll need multiple approvals-and higher capital.
How Much Money Do You Need to Start?
Capital isn’t just a suggestion. It’s a hard requirement. VARA doesn’t care how big your idea is-if you don’t have the cash to back it up, you won’t get approved.Minimum paid-up capital ranges from AED 100,000 ($27,000) to AED 1.5 million ($408,000), depending on your service type. But here’s the catch: if you apply for multiple services, the capital doesn’t just add up-it stacks.
For example:
- Broker-dealer service: AED 1 million
- Custody service: AED 4 million
- Exchange service: AED 5 million
If you want all three? You need AED 10 million in paid-up capital. That’s over $2.7 million USD. This isn’t a startup budget. This is institutional-grade funding.
What Else Costs Money?
Beyond capital, there are fees you can’t avoid:- Application fee: AED 40,000 to AED 100,000, depending on how complex your business model is.
- Annual supervision fee: AED 80,000 to AED 200,000 per year. This covers ongoing audits, inspections, and compliance checks.
- Professional services: Legal help, compliance software, cybersecurity consultants, and auditors. These aren’t optional. Most companies spend AED 200,000-500,000 just to get compliant before even submitting the application.
Many teams underestimate this. They think getting the license is the end goal. It’s not. It’s the starting line.
Operational Rules You Can’t Ignore
You need more than money. You need systems.- Legal entity in Dubai: You must be incorporated in Dubai. No offshore companies. No foreign branches. You need a local legal structure.
- Fit-and-proper criteria: Every board member, CEO, compliance officer, and key employee must pass a background check. No criminal records. No ties to sanctioned entities.
- Detailed business plan: You must explain exactly what you do, who your customers are, how you’ll make money, and how you’ll manage risk.
- Security and tech standards: Your systems must meet international cybersecurity standards. This includes encryption, two-factor authentication, penetration testing, and disaster recovery plans.
- Insurance coverage: You need insurance for cyberattacks, theft, and loss of client assets. Policies must be issued by approved providers.
- Record-keeping: Every transaction, every customer interaction, every login, every alert must be stored for at least five years. VARA can audit you anytime.
Anti-Money Laundering: The Biggest Hurdle
VARA takes AML/CFT seriously. And they’re not playing around.You must implement:
- Automated KYC: Real-time identity verification using government-issued IDs, facial recognition, and document validation.
- Source of funds checks: You can’t just accept crypto from anyone. You must prove where the money came from-bank transfers, crypto sales, employment income. No cash deposits.
- Transaction monitoring: Your system must flag unusual activity automatically-large transfers, rapid movement between wallets, mixing services.
- Suspicious activity reporting: If something looks off, you must report it to VARA within 24 hours.
- Staff training: Every employee must be trained quarterly on AML rules. Records of training must be kept.
One company lost its license in late 2024 because their KYC system didn’t catch a client using a fake passport from a country under sanctions. They thought it was a mistake. VARA didn’t.
What’s Banned? The Hard Restrictions
Some things are just not allowed-no exceptions.- Privacy coins: Monero, Zcash, and any other token designed to hide transaction details are completely banned. VARA says anonymity is incompatible with financial integrity.
- Unapproved marketing: You can’t run ads, social media campaigns, or influencer promotions without VARA’s written approval. All ads must include clear risk disclosures.
- Weak cybersecurity: No outdated software. No unpatched systems. No third-party hosting without certification. VARA requires ISO 27001 or equivalent.
These aren’t gray areas. They’re black-and-white rules. Violate them once, and your license is revoked.
How VARA Compares to Other UAE Regulators
Dubai isn’t the only place with crypto rules. DIFC has DFSA. Abu Dhabi has FSRA. And the federal SCA regulates entities outside free zones.Here’s how VARA stacks up:
| Regulator | Area | Focus | Key Advantage |
|---|---|---|---|
| VARA | Dubai (excluding DIFC) | Full virtual asset coverage | Most comprehensive, modern, and transparent framework |
| DFSA | DIFC | Traditional finance + crypto | Strong international reputation, familiar to banks |
| FSRA | ADGM | Hybrid crypto and fintech | Faster approvals for startups |
| SCA | Entire UAE (outside free zones) | Securities and commodities | Only applies if you’re not in a free zone |
If you’re building a crypto business from scratch, VARA is the most complete option. But it’s also the strictest.
What Happens After You Get Licensed?
Getting the license isn’t the finish line-it’s the beginning of ongoing obligations.You’ll face:
- Quarterly compliance reports
- Annual external audits
- Random inspections
- Updates to rules (VARA changes policies every 6-12 months)
- Re-licensing every two years
One firm that got licensed in early 2024 had to upgrade their entire system six months later because VARA introduced new data retention rules. They didn’t plan for that. They lost three months of revenue.
Stay ahead by building compliance into your DNA-not as a cost center, but as part of your product.
Final Reality Check
VARA isn’t here to make things easy. It’s here to make Dubai the safest, most transparent crypto hub in the world. That means high costs, strict rules, and zero tolerance for shortcuts.But if you’re serious about building a crypto business that lasts, there’s no better place. The license gives you access to global investors, institutional clients, and real market credibility. Companies with VARA licenses are getting funded, partnering with banks, and expanding into Asia and Europe.
The question isn’t whether you can afford to get licensed. It’s whether you can afford not to.