VARA Crypto Licensing Requirements in Dubai 2025: What You Need to Know

What Is VARA and Why Does It Matter for Crypto Businesses in Dubai?

Dubai’s Virtual Assets Regulatory Authority (VARA) is the only government body in the emirate that gives legal permission to run crypto businesses. It started in 2022 to bring order to what was once a wild west of digital asset services. If you want to operate a crypto exchange, custody service, or issue tokens in Dubai, you must get a VARA license. No exceptions. This isn’t optional-it’s the law.

Before VARA, crypto companies in Dubai operated in a gray zone. Now, if you’re not licensed, you can’t legally offer services to customers in Dubai. Even if you’re based overseas, if your platform is accessible to people in Dubai, VARA can take action. That’s how serious they are.

VARA doesn’t just issue licenses. It sets the rules for how crypto businesses must operate-from how they store assets to how they verify customers. It also blocks certain coins and controls how companies advertise. Think of it as the FAA for crypto: if you’re flying in Dubai’s airspace, you follow their rules.

The Six Types of VARA Licenses You Can Apply For

VARA doesn’t give one-size-fits-all licenses. It breaks them into six clear categories, and you need to pick the right one-or multiple-for your business.

• Exchange Services: Lets you run a platform where people trade crypto for crypto or crypto for fiat (like USD or AED).
• Broker-Dealer Services: Covers buying and selling crypto on behalf of clients. This includes both fiat-to-crypto and crypto-to-crypto trades.
• Custody Services: If you’re holding someone else’s crypto for them, you need this license. Security and insurance are non-negotiable here.
• Transfer Services: For companies that move crypto from one wallet to another on behalf of users.
• Wallet Provision Services: If you’re offering digital wallets to customers (like a crypto bank account), you need this.
• Token Issuance: This one’s split into two types. Category 1 is for companies issuing tokens directly-they need VARA approval for each token. Category 2 requires you to work through a licensed intermediary.

Most startups start with one or two of these. But if you’re building a full-service crypto platform, you’ll likely need three or more. Each one adds complexity-and cost.

How Much Money Do You Need to Get Licensed?

VARA doesn’t just want your paperwork. They want proof you can stay in business-even if the market crashes.

Capital requirements are strict and stack up. For example:

• Broker-Dealer: AED 1 million ($272,000)
• Custody: AED 4 million ($1.09 million)
• Exchange: AED 5 million ($1.36 million)

If you want all three? You need AED 10 million ($2.72 million) in paid-up capital. That’s not a typo. This isn’t a startup grant-it’s a serious financial commitment.

Even the smallest license, like basic wallet provision, requires AED 100,000 ($27,200). That’s still more than most crypto startups have in their bank account. Most applicants bring in investors or secure funding before applying.

And it’s not just about cash on hand. VARA checks your balance sheet, cash flow projections, and whether you can cover losses for at least 12 months. They don’t want another Terra collapse happening under their watch.

Application Fees, Annual Costs, and Hidden Expenses

The license isn’t a one-time fee. Think of it like a subscription service-with high renewal costs.

• Application Fee: Between AED 40,000 and AED 100,000 ($10,900-$27,200), depending on how many services you’re applying for.
• Annual Supervision Fee: Ranges from AED 80,000 to AED 200,000 ($21,800-$54,400) per year.

These fees aren’t just bureaucracy. They fund VARA’s audits, surveillance systems, and compliance teams. But there are other costs no one talks about:

• Hiring a local legal team familiar with VARA (not just any lawyer)
• Building a KYC/AML system that meets FATF standards
• Getting cyber insurance that covers crypto theft
• Setting up secure data centers in Dubai
• Training staff on compliance procedures

Many companies spend over AED 500,000 ($136,000) just to get approved-not including capital. Don’t underestimate this. A poorly prepared application gets rejected, and you lose your fee.

What VARA Demands Beyond Money

Money is just the entry ticket. VARA wants to see you’re built to last.

You must be a legal entity registered in Dubai. No offshore companies. No shell structures. Your business must have a physical presence-office, staff, local director.

Every key person-CEO, CTO, compliance officer-must pass a "fit and proper" check. That means:

• No criminal record
• No history of financial fraud
• No bans from other regulators
• Proven experience in finance or tech

You need a detailed business plan. Not a pitch deck. A real document showing:

• Who your customers are
• How you’ll prevent money laundering
• How you’ll handle customer complaints
• What happens if your system goes down

Security is non-negotiable. You need:

• Multi-signature cold storage for assets
• Regular third-party security audits
• Encryption for all data
• Backups stored in Dubai

And you must carry insurance. Not just any insurance. It has to cover theft, cyberattacks, and operational failures. VARA will ask for the policy details and the insurer’s credentials.

The Forbidden Tokens and Advertising Rules

VARA isn’t just regulating how you operate-it’s deciding what you can even offer.

Privacy coins like Monero and Zcash are banned. Why? Because they hide transaction details. VARA says that’s a risk for money laundering. If your platform supports these coins, your license will be denied-or revoked.

Advertising is controlled too. You can’t just run a TikTok ad saying "Get rich with crypto!" Every marketing piece-website, social media post, email, billboard-needs VARA’s approval before going live. They check for:

• False promises of returns
• Missing risk warnings
• Use of misleading terms like "guaranteed" or "100% safe"

Even your logo and branding can be rejected if it looks too much like a bank. VARA wants you to be clear: you’re not a bank. You’re a crypto service provider.

How VARA Compares to Other UAE Regulators

Dubai isn’t the only place in the UAE with crypto rules. But it’s the most focused.

• DIFC (DFSA): Regulates financial services in Dubai’s financial free zone. More traditional, stricter on banking-style activities. Better for institutional players.
• ADGM (FSRA): Abu Dhabi’s regulator. Similar to DFSA but slightly more flexible on token issuance.
• SCA & Central Bank: Cover the rest of the UAE. If you’re not in a free zone, you fall under them. Their rules are less clear for crypto.

VARA is the only one that’s built from the ground up for crypto. It’s faster, more tech-savvy, and covers everything from NFTs to DeFi. If you’re a crypto-native company, VARA is your best shot.

Real-World Challenges Companies Face

Getting the license is hard. Staying compliant is harder.

Companies report three big headaches:

1. Application delays: Even with perfect paperwork, reviews take 4-8 months. VARA doesn’t rush.
2. Changing rules: In 2024, VARA added new rules for AI in trading. In 2025, they started requiring environmental impact reports for mining operations. You have to keep up.
3. Staff training: Every employee who touches customer data or transactions needs annual compliance training. That’s expensive and time-consuming.

One Dubai-based exchange spent over a year preparing. They hired a former regulator as their compliance officer. They automated their KYC system with a U.S.-based vendor. They passed on the first try. Others failed twice.

Tip: Don’t try to do this alone. Hire a VARA-specialized law firm. They know what the inspectors are looking for before you even submit.

What’s Next for VARA in 2025 and Beyond

VARA isn’t done evolving. In 2025, they’re working on:

• Rules for DeFi protocols-how to regulate smart contracts that don’t have a company behind them
• Guidance for DAOs-can a decentralized group be held legally responsible?
• Integration with central bank digital currency (CBDC)-will Dubai’s digital dirham work with crypto wallets?
• Environmental standards for energy-heavy operations like mining

If you’re building a crypto business today, you’re not just applying for a license. You’re signing up for a long-term relationship with a regulator that’s always watching, always updating, always pushing the industry forward.

Dubai isn’t trying to stop crypto. It’s trying to own it. And VARA is the tool they’re using to make sure it’s done right.