A crypto or tokenisation project in Dubai can look like a standard company setup until a banker asks which regulator authorised the activity. Many founders assume a trade license covers virtual assets. It does not. Offering virtual asset services in Dubai requires a separate approval from the Virtual Assets Regulatory Authority (VARA), and a business that begins serving clients before receiving it faces serious regulatory and banking problems.
What VARA Regulates
VARA was established by Dubai Law No. 4 of 2022 as a dedicated regulator for virtual assets, and its framework is set out in the Virtual Assets and Related Activities Regulations 2023 and accompanying rulebooks. Its perimeter covers the Emirate of Dubai, including the mainland and free zones, but excludes the Dubai International Financial Centre, which has its own regulator. A VARA license authorises specific activities rather than the company as a whole, so a firm holding a trade license for IT consultancy cannot run a client-facing token exchange on that basis. A practical overview of the VARA license in the UAE explains how these approvals fit together.
VARA also operates within a federal framework. Cabinet Decision No. 111 of 2022 governs virtual assets nationally, the federal securities regulator retains its own mandate, the Central Bank of the UAE oversees payments and banking, and the Federal Tax Authority administers tax. Since 2024, a recognition arrangement has allowed VARA-licensed providers to serve clients across the wider UAE, outside the financial free zones, without a separate federal license. Federal rules continue to evolve, so the current position should be confirmed.
The Seven Licensed Activities
VARA licenses seven categories of activity: advisory services, broker-dealer services, custody services, exchange services, lending and borrowing services, management and investment services, and transfer and settlement services. Each carries its own rulebook and obligations, and a firm must apply for every activity it intends to carry out. Capital, systems and staffing expectations differ significantly between them; a custody provider faces a very different control burden from an exchange that matches orders. Issuing tokens is governed separately by VARA's Virtual Assets Issuance Rulebook, for which VARA published detailed guidance in April 2026.
Starting with the activity that will generate revenue in the first year, and adding others later, is usually more realistic than applying for several at once.
Core Requirements
Applicants need a properly incorporated entity with a clear ownership chain. Owners and senior managers undergo a fit and proper assessment, and corporate documents for any foreign holding company generally need notarisation and attestation. VARA sets capital and insurance requirements by activity, and every applicant must demonstrate a compliance function, a risk framework, anti-money laundering and counter-terrorist financing controls, and robust cybersecurity. A custody applicant, for example, must explain how private keys are stored and who can authorise transfers.
The business plan ties everything together. Reviewers test whether products, target clients, staffing, policies and financial projections are consistent. A plan promising institutional clients with no compliance hire raises questions.
How the Trade License and VARA Approval Fit Together
The two approvals do different jobs. The trade license from a free zone or mainland authority gives the company its legal existence, while the VARA license authorises the regulated activity. Founders typically incorporate first, ensuring the licensed activity wording aligns with the planned VARA activity, and then submit their VARA application. Marketing is also restricted: since October 2024, only VARA-licensed providers may market virtual asset activities in or targeting Dubai.
Costs, Tax and Ongoing Obligations
A VARA license brings recurring costs, including license fees, capital, compliance staff, technology and audits, which should be budgeted annually rather than as one-off setup expenses. Official figures should be taken from VARA's published fee schedules. Virtual asset businesses are also subject to corporate tax and VAT under Federal Tax Authority rules, and clean bookkeeping from the outset helps tax filings and regulatory reporting reconcile.
Mistakes That Delay Approval
The most common problems are onboarding clients before approval, applying for a scope too broad for the team and systems, and submitting documents without the required attestation.
Conclusion
A VARA license is the regulatory permission that sits on top of a company's legal structure. Defining the first regulated activity, securing a compliance lead and preparing clean ownership documents give an application the best start. Founders incorporating through Dubai free zones such as Meydan Free Zone should align their licensed activities with their planned VARA scope from the outset.
