Author: Beosin With its convenient geographical location, clear government policy support for cryptocurrencies, and friendly tax policies (personal income tax of 0%, corporate income tax of 9%, and 146 doubleAuthor: Beosin With its convenient geographical location, clear government policy support for cryptocurrencies, and friendly tax policies (personal income tax of 0%, corporate income tax of 9%, and 146 double

UAE Crypto Compliance: VARA and ADGM Interpretation

2025/06/16 13:01
5 min read

Author: Beosin

With its convenient geographical location, clear government policy support for cryptocurrencies, and friendly tax policies (personal income tax of 0%, corporate income tax of 9%, and 146 double taxation avoidance agreements), the UAE has become one of the global centers for cryptocurrency and blockchain innovation. It is worth noting that in the field of virtual asset regulation in the UAE, ADGM (Abu Dhabi Global Market) and VARA (Dubai Virtual Asset Regulatory Authority) have different characteristics and positioning. When analyzing the UAE's regulated virtual asset licensing system, it is necessary to distinguish between the two major jurisdictions of Abu Dhabi and Dubai.

This article will explore the key content and differences between Abu Dhabi and Dubai in terms of compliance supervision. By understanding the regulatory requirements and differences between the two places, crypto practitioners can better conduct their business, ensure their own legal and compliant operations, and promote the healthy development of the entire crypto industry.

Abu Dhabi vs Dubai

In Abu Dhabi, ADGM (Abu Dhabi Global Market) is an international financial center established to support the region's economic strategy and play the role of a global financial and commercial center. Its independent regulator is FSRA (Financial Services Regulatory Authority), which is responsible for supervising and enforcing specific crypto asset regulations of ADGM.

FSRA regulates virtual assets as a specific asset class in the financial industry. Therefore, the scope of business of the crypto asset licenses it issues is relatively limited, and it does not have a special customized regulatory framework like Dubai VARA. The application process usually takes six to seven months, and the compliance requirements for applicants are relatively strict - using the licensing standards of traditional financial institutions. This makes exchanges with technical backgrounds face a high entry threshold, while traditional financial institutions are more adaptable to transform and carry out crypto business.

In Dubai, virtual asset licenses are divided into two major systems:

1. DIFC (Dubai International Financial Center): As a financial free trade zone, its regulatory model is similar to that of ADGM, and its independent regulator is DFSA (Dubai Financial Services Authority). DFSA classifies virtual assets as tokenized assets in financial instruments for regulation. The application period is about seven to eight months, mainly for large institutions with financial qualifications, but provides a special channel for "innovation license": pure technology development companies (not involving customer fund custody or financial transactions) can be approved in only about three months.

2. VARA (Virtual Asset Regulatory Authority): A regulatory agency set up by the Dubai government. It does not directly issue business licenses, but superimposes virtual asset operating licenses on existing company licenses. Its regulatory scope covers Dubai mainland companies and free zone companies (except DIFC), and authorizes specific virtual asset businesses through a licensing mechanism.

3. SCA (Securities and Commodities Administration) is responsible for regulating ICO and token issuance activities. Companies planning to conduct ICO in the UAE may need to obtain approval from the SCA.

Key differences between VARA and ADGM

Institutional nature and positioning

VARA: It is a government functional department established by the Dubai government to specifically regulate virtual assets. It is responsible for regulating the virtual asset industry in Dubai (except DIFC), including virtual currency exchanges, virtual asset venture capital funds, NFT platforms, etc.

ADGM: It is a financial free trade zone with an independent regulatory system. Its Financial Services Regulatory Authority (FSRA) is responsible for supervising companies that provide virtual asset-related services within ADGM.

Jurisdiction

VARA: The jurisdiction is the Emirate of Dubai (excluding DIFC).

ADGM: Jurisdiction covers Abu Dhabi Global Market and Al Mariah Island.

Scope of supervision of virtual asset activities

VARA: Regulated virtual asset activities include brokerage services, virtual asset consulting services, exchanges/multilateral transactions, virtual asset custody, virtual asset management, investment transactions as a principal, and NFT-related activities.

ADGM: Regulated virtual asset activities include brokerage services, virtual asset consulting services, exchanges/multilateral transactions, virtual asset custody, virtual asset management, investment transactions as a principal, etc., but NFT-related activities are not within the scope of regulation.

Application conditions and requirements

Company registration: VARA requires the applicant company to be registered in the Dubai mainland area or any free trade zone in Dubai (except difc); ADGM requires the applicant company to be registered in the Abu Dhabi Global Market.

Office Space: Physical offices are required for all applicants. Coworking desks are not accepted. VARA generally requires at least one desk for every two visas; ADGM generally requires at least one desk for every three visas.

Regulatory capital: VARA’s regulatory capital requirements range from USD 11,000 to USD 27,000, up to a maximum of USD 408,000, or 15%/25% of fixed annual expenses, depending on the type of virtual asset activity; ADGM’s operating expenses (opex) period is 6 to 12 months depending on the type of activity.

Application process and time

VARA: The application process includes preparing a compliant business plan, holding an initial meeting with VARA, submitting materials as required, reviewing materials, making operational adjustments based on conditions, re-reviewing and issuing licenses, etc. It usually takes 4-8 months to obtain a business license. Document list: Overview of virtual asset services, KYC documents of company directors and shareholders, financial forecasts, other regulatory documents required by VARA, etc.

ADGM: The application process includes due diligence and discussion with the FSRA team, submission of a formal application, obtaining approval in principle, obtaining final approval, conducting "operational start-up" tests, etc. The application time is generally about 6 months. Document list: virtual asset service business plan, KYC documents of company directors and shareholders and other key personnel, financial forecasts, other regulatory documents required by ADGM, etc.

Cost

VARA: Application fees range from $11,000 to $27,000, and ongoing monitoring fees range from $22,000 to $55,000, depending on the activity.

ADGM: Application fees range from US$20,000 to US$125,000, and ongoing monitoring fees range from US$15,000 to US$60,000, depending on the activity.

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