Dubai: The Virtual Assets Regulatory Authority (VARA) aims to regulate and create an innovative landscape for small crypto firms.
VARA is the only digital assets regulator in the emirate and one of seven in the United Arab Emirates. Dubai introduced its crypto regulations last year, which were generally well-received by the industry. However, some companies expressed concerns about the costs that barred smaller firms from using cryptocurrency.
During his visit to Paris Blockchain Week, Le Carrousel du Louvre, VARA's, Paris, VARA's CEO, Matthew White, while talking about crypto regulations, said, "The crypto regulations in Dubai are not perfect. There are a number of things I am looking at to try and make the regime fit for everybody. One is figuring out how to deal with compliance costs for smaller entities."
As a solution, White proposed that larger market players could host smaller ones to share regulatory compliance burdens.
"We are looking at structures whereby larger market participants host smaller ones and bear the compliance cost," he explained.
This arrangement would enable smaller players to enter the regulated ecosystem while avoiding the same compliance costs as larger players.
The new rules require firms to obtain authorization to operate within the country. Crypto.com, Deribit's Dubai-based unit, and Nine Blocks crypto hedge fund have all obtained the necessary operating licenses.
Last year, on November 16, VARA announced that White had been appointed as the new CEO, replacing Henson Orser, as part of the company's preparations for full-scale market operations. This announcement signalled VARA's commitment to strengthening its position in the market.
The change in leadership coincided with the UAE's decision to fine unlicensed virtual asset service providers (VASPs). Consequently, on November 8, the UAE regulators issued joint guidance for VASPs detailing fines and sanctions for non-compliance.
"Not many people have the resources to get regulated, and that is something that we have seen, so we are looking at structures whereby we can have larger market participants hosting smaller ones, for example," White said.