The views expressed in this column are those of the author and do not constitute financial or legal advice.
Dubai’s Virtual Assets Regulatory Authority (VARA) has quietly become one of the most watched regulatory experiments in global finance. Established in 2022 as the world’s first dedicated virtual assets regulator at the city-state level, VARA is attempting what every major financial centre has struggled with: a comprehensive, workable framework for crypto that protects consumers without killing innovation. Two years into the experiment, I believe it is working — and other jurisdictions are watching closely.
What VARA Got Right
The foundational design decision behind VARA was correct: create a dedicated, expert-led regulator for virtual assets rather than forcing crypto into frameworks designed for equities or bank deposits. The asset class is genuinely novel. Novelty requires regulatory novelty.
VARA’s comprehensive Virtual Assets and Related Activities Regulations cover the full spectrum: virtual asset issuance, exchange operations, custody, lending, and advisory services. The licence categories are specific — you must know exactly what activities you are licensed for, and unlicensed activities are clearly prohibited. This clarity reduces compliance ambiguity and actually helps legitimate firms navigate the regulatory landscape more confidently than vague principles-based frameworks allow.
The Hard Test: Responding to FTX
VARA’s credibility was tested by the FTX collapse in November 2022. FTX had operated in Dubai under a Minimum Viable Product (MVP) licence during a pre-operational period. When FTX imploded globally, VARA’s response was instructive: immediate licence revocation, public clarification that FTX had not been approved for full operations, and a tightening of MVP licence operational constraints going forward.
This is not the behaviour of a regulator captured by its industry. VARA moved with transparency and speed. The lesson drawn — that MVP licences require tighter operational guardrails — was a sensible regulatory learning from a genuine market failure. Compare this to the responses of regulators in other jurisdictions who were caught equally flat-footed by FTX and produced nothing like the same clarity of response.
Will This Model Influence Global Regulation?
My assessment is yes — selectively. The EU’s MiCA regulation, implemented in 2024, takes a different but conceptually similar approach: comprehensive activity-based licensing, specific licence categories, and genuine enforcement capability. The UK’s FCA is building a crypto regulatory framework that borrows design principles from both MiCA and VARA. The US, despite years of regulatory inaction, is moving toward clearer legislative frameworks.
What distinguishes VARA specifically is iteration speed. Dubai can update regulatory frameworks faster than Brussels can convene a working group. This agility — responding to new asset classes, DeFi developments, and enforcement learnings in near-real time — is a genuine competitive advantage in a sector evolving faster than any regulatory framework can comfortably track.
The risk is that VARA’s global reputation becomes dependent on the conduct of firms it licenses. Every major exchange failure or investor harm in a VARA-licensed firm reflects on the regulator. Maintaining rigorous assessment standards — even when they create friction for legitimate applicants seeking speed — is essential to the long-term credibility of the Dubai crypto regulatory brand.
Related Reading
See also: Dubai Crypto Regulation VARA 2026, Bahrain Crypto Regulation 2026, and Gulf Banking Transformation 2026.
Frequently Asked Questions
What is Dubai’s VARA?
VARA (Virtual Assets Regulatory Authority) is Dubai’s dedicated crypto and digital assets regulator, established in 2022 by Law No. 4 of 2022. It is the world’s first standalone virtual asset regulatory authority. VARA licenses and supervises virtual asset service providers (VASPs) in Dubai — exchanges, custodians, issuers, and advisors — and enforces the Virtual Assets and Related Activities Regulations issued in 2023.
Is cryptocurrency legal in Dubai in 2026?
Yes. Virtual assets are legal and regulated in Dubai under VARA’s framework. Individuals can hold and trade crypto. Businesses providing virtual asset services must be licensed by VARA (mainland Dubai and most free zones) or by ADGM’s FSRA (Abu Dhabi Global Market). Operating unlicensed virtual asset services that require a licence is illegal.
Also Read: Opinion: Why the UAE Will Be Among the World’s Most Competitive Economies by 2030 | Khalid Al Ameri: The Emirati Who Turned Storytelling Into a Stanford-Backed Global Business | Dr. Sara Al Madani: The Emirati Entrepreneur Who Started at 15 and Never Stopped Building
