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  • VA Activity and Other Rulebooks

    • Advisory Services Rulebook

      • Introduction

        The Dubai Virtual Assets Regulatory Authority [VARA] was established and authorised by Law No. [4] of 2022 Regulating Virtual Assets in the Emirate of Dubai [Dubai VA Law] to regulate Virtual Asset Service Providers [VASPs].
         
        This Advisory Services Rulebook is issued pursuant to, and forms part of, the Virtual Assets and Related Activities Regulations 2023 [the Regulations] issued by VARA and applies to all VASPs Licensed by VARA to carry out Advisory Services in the Emirate.
         
        This Advisory Services Rulebook applies in addition to all other requirements in the Regulations as may be in force from time to time. As such, VASPs Licensed by VARA to carry out Advisory Services must also comply with the following Rulebooks applicable to all VASPs:
         
          1. Company Rulebook;
          2. Compliance and Risk Management Rulebook;
          3. Technology and Information Rulebook;
          4. Market Conduct Rulebook; and
          5. All Rulebooks specific to the VA Activities that a VASP is Licensed by VARA to carry out.
         
        Where a VASP is Licensed by VARA to carry out other VA Activities in the Emirate in addition to Advisory Services, it must comply with all Rulebooks which apply to those other VA Activities. Unless otherwise stated, the Rules in VA Activity specific Rulebooks apply cumulatively for each VA Activity a VASP carries out.
         
        Capitalised terms in this Advisory Services Rulebook have the meanings ascribed to them in the Regulations or as otherwise provided in Schedule 1.
         

      • Part I – Policies, Procedures and Public Disclosures

        • A. Policies and Procedures

          1. In addition to all other requirements in the Regulations and Rulebooks, VASPs providing Advisory Services shall establish, implement and enforce appropriate written internal policies and procedures relating to the following—
           
            a. how they ensure the independent basis of their advice;
            b. how they ensure all Staff providing advice are sufficiently competent in accordance with Rule II.B.1 of this Advisory Services Rulebook; and
            c. such other policies and procedures as VARA may require from time to time.
           

        • B. Public Disclosures

          1. VASPs providing Advisory Services shall publish on their website in a prominent place or make available by other publicly accessible means—
           
            a. a detailed description of any actual or potential conflicts of interest arising out of their activities, and how these are managed;
            b. their policies and procedures relating to data privacy, whistleblowing and handling of client complaints;
            c. a statement of whether the VASP refers or introduces clients to other Entities including, but not limited to, other VASPs, and if so, a description of the terms of such arrangements, and the monetary or non-monetary benefits received by the VASP, including by way of reciprocation for any service or business; and
            d. a statement of whether the VASP has accounts, funds or Virtual Assets maintained by a third party and if so, provide the identity of that third party.
           
          2. Other disclosable matters. To the extent permissible under applicable laws, VASPs providing Advisory Services shall publish on their website or by other publicly accessible means—
           
            a. details of any past convictions or prosecutions of any member[s] of their Senior Management or Board, whether before the courts of the UAE or the courts of another jurisdiction; and
            b. any such other information relating to their business or activities as VARA may reasonably require.
           
          3. The disclosure requirements set out in this Rule I.B of this Advisory Services Rulebook are in addition to all disclosures required under the Market Conduct Rulebook and to all notifications to VARA required under the Compliance and Risk Management Rulebook.
           

      • Part II – Advisory Services Rules

        • A. Client Suitability

          1. VASPs providing Advisory Services shall establish procedures to ensure that their clients understand the risks associated with investing in Virtual Assets and are financially able to satisfy any obligation which may arise from them acting upon advice provided by the VASP.
          2. VASPs providing Advisory Services shall provide all advice regarding Virtual Assets in good faith and which is suitable for, and in the best interest of, each client. In order to ensure all advice complies with this Rule II.A.2 of this Advisory Services Rulebook, VASPs shall consider the following factors at a minimum in respect of each client—
           
            a. knowledge and experience in investing in Virtual Assets;
            b. investment objectives including, but not limited to, risk tolerance, time horizon and venues through which they can acquire Virtual Assets; and
            c. financial circumstances including, but not limited to, their ability to bear sudden and significant losses or the proportion of their net worth which is invested in Virtual Assets.
           
          3. VASPs providing Advisory Services shall collect all necessary information from clients for the purpose of assessing relevant factors in accordance with Rule II.A.2 of this Advisory Services Rulebook and take all reasonable steps to ensure such information is accurate and up-to-date. All such information shall be maintained for at least eight [8] years.
          4. VASPs providing Advisory Services shall, in all advice provided to clients, specify how the advice is appropriate for a client by reference to the factors assessed by the VASP in accordance with Rule II.A.2 of this Advisory Services Rulebook.
          5. VASPs providing Advisory Services must eliminate any conscious bias, and take all reasonable steps to eliminate any non-conscious bias, in order to prevent discrimination between clients on any grounds which is not in the best interests of a client receiving advice.
           

        • B. Staff Competency

          1. In addition to all requirements in the Company Rulebook, VASPs providing Advisory Services shall ensure all of its Staff providing Advisory Services are knowledgeable, competent and suitably trained. In assessing competency of such Staff, VASPs shall consider the following factors at a minimum—
           
            a. academic, professional and industry qualifications;
            b. experience in the Virtual Assets sector, including but not limited to hands-on working experience acquired through their employment by Entities carrying out activities similar to VA Activities outside of the Emirate;
            c. experience in conducting regulated investment-related activities similar to the provision of Advisory Services, whether or not related to Virtual Assets;
            d. whether they have a good understanding of the VARA regulatory framework, including but not limited to the Regulations, Rules and Directives governing the provision of Advisory Services; and
            e. industry standards as may be applicable to the Virtual Assets sector from time to time.
           

        • C. Verification of Information

          1. VASPs providing Advisory Services shall only provide advice which does not contain statements, promises, forecasts or other types of information which they know or suspect to be misleading, false or deceptive or which they should have reasonably known to be misleading, false or deceptive at the time of making such statement, promise or forecast.
          2. Prior to making any statement, promise or forecast, VASPs providing Advisory Services shall verify factual information against appropriate and reliable source materials and shall use all reasonable endeavours to verify the continued accuracy of such information.
           

        • D. Methodology

          1. VASPs shall, in the course of providing Advisory Services, assess a broad range of Virtual Assets available to the client which must be sufficiently diverse such that the client’s investment objectives are met.
           

      • Schedule 1 – Definitions

        Term Definition
        “Advisory Services” has the meaning ascribed to it in Schedule 1 of the Regulations.
        “Advisory Services Rulebook” means this Advisory Services Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “Board” has the meaning ascribed to it in the Company Rulebook.
        “Company Rulebook” means the Company Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “Compliance and Risk Management Rulebook” means the Compliance and Risk Management Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “Directive” has the meaning ascribed to it in the Regulations.
        “Dubai VA Law” means Law No. [4] of 2022 Regulating Virtual Assets in the Emirate of Dubai, as may be amended from time to time.
        “Emirate” means all zones across the Emirate of Dubai, including Special Development Zones and Free Zones but excluding the Dubai International Financial Centre.
        “Entity” means any legal entity or individual.
        “Licence” has the meaning ascribed to it in the Regulations.
        “Licensed” means having a valid Licence.
        “Market Conduct Rulebook” means the Market Conduct Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “Regulations” means the Virtual Assets and Related Activities Regulations 2023, as may be amended from time to time.
        “Rule” has the meaning ascribed to it in the Regulations.
        “Rulebook” has the meaning ascribed to it in the Regulations.
        “Senior Management” has the meaning ascribed to it in the Company Rulebook.
        “Staff” has the meaning ascribed to it in the Company Rulebook.
        “Technology and Information Rulebook” means the Technology and Information Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “UAE” means the United Arab Emirates.
        “VA Activity” means the activities listed in Schedule 1 of the Regulations, as may be amended from time to time.
        “VARA” means the Dubai Virtual Assets Regulatory Authority.
        “VASP” means an Entity authorised by VARA to conduct VA Activity[ies] in the Emirate.
        “Virtual Asset” or “VA” has the meaning ascribed to it in the Dubai VA Law.

         

    • Broker-Dealer Services Rulebook

      • Introduction

        The Dubai Virtual Assets Regulatory Authority [VARA] was established and authorised by Law No. [4] of 2022 Regulating Virtual Assets in the Emirate of Dubai [Dubai VA Law] to regulate Virtual Asset Service Providers [VASPs].
         
        This Broker-Dealer Services Rulebook is issued pursuant to, and forms part of, the Virtual Assets and Related Activities Regulations 2023 [the Regulations] issued by VARA and applies to all VASPs Licensed by VARA to carry out Broker-Dealer Services in the Emirate.
         
        This Broker-Dealer Services Rulebook applies in addition to all other requirements in the Regulations as may be in force from time to time. As such, VASPs Licensed by VARA to carry out Broker-Dealer Services must also comply with the following Rulebooks applicable to all VASPs:
         
          1. Company Rulebook;
          2. Compliance and Risk Management Rulebook;
          3. Technology and Information Rulebook;
          4. Market Conduct Rulebook; and
          5. All Rulebooks specific to the VA Activities that a VASP is Licensed by VARA to carry out.
         
        Where a VASP is Licensed by VARA to carry out other VA Activities in the Emirate in addition to Broker-Dealer Services, it must comply with all Rulebooks which apply to those other VA Activities. Unless otherwise stated, the Rules in VA Activity specific Rulebooks apply cumulatively for each VA Activity a VASP carries out.
         
        Capitalised terms in this Broker-Dealer Services Rulebook have the meanings ascribed to them in the Regulations or as otherwise provided in Schedule 1.
         

      • Part I – Polices, Procedures and Public Disclosures

        • A. Policies and Procedures

          1. In addition to all other requirements in the Regulations and Rulebooks, VASPs providing Broker-Dealer Services shall establish, implement and enforce appropriate written internal policies and procedures relating to the following—
           
            a. the prohibition, detection, prevention and/or deterrence of Market Offences and any other abusive practices within their business or using their services including, but not limited to, relevant internal rules, compliance programmes, sanctioning policies and powers;
            b. Execution and routing of client orders;
            c. the ability of clients to have access to and withdraw their Virtual Assets including, but not limited to, during periods of high uncertainty and/or extreme volatility; and
            d. such other policies and procedures as VARA may require from time to time.
           
          2. VASPs providing Broker-Dealer Services shall assess and, in any case, at least yearly review the effectiveness of their policies and procedures and take appropriate measures to address any deficiencies.|
           

        • B. Public Disclosures

          1. VASPs providing Broker-Dealer Services shall publish on their website in a prominent place or make available by other publicly accessible means—
           
            a. a detailed description of any actual or potential conflicts of interest arising out of their activities, and how these are managed;
            b. their policies and procedures relating to data privacy, whistleblowing and handling of client complaints;
            c. a summary containing the following information pertaining to each Virtual Asset offered by the VASP—
           
              i. name and symbol;
              ii. date of issuance;
              iii. market capitalisation and fully diluted value;
              iv. circulating supply, including as a percentage of maximum total supply [if applicable];
              v. whether the Virtual Asset has been subject to an independent smart contract audit and the date of the most recent audit; and
              vi. largest reduction in price from high to low stated as both an absolute amount and a percentage change, including when it occurred;
           
            d. a description of how the VASP determines the prices of the Virtual Assets it quotes to clients;
            e. a description of the VASP's routing practices, including if twenty percent [20%] or more of client orders are routed to any liquidity source and if so, the identity of such source[s];
            f. a statement as to whether the VASP holds or maintains funds or Virtual Assets or provides clearing services for other VASPs providing Broker-Dealer Services and if so, include a description of those services;
            g. a statement as to the VASP’s arrangements for the protection of clients’ ownership of assets held by the VASP;
            h. a statement of whether the VASP refers or introduces clients to other Entities including, but not limited to, other VASPs and, if so, a description of the terms of such arrangements and the monetary or non-monetary benefits received by the VASP, including by way of reciprocation for any service or business; and
            i. a statement of whether the VASP has accounts, funds or Virtual Assets maintained by a third party and if so, provide the identity of that third party.
           
          2. Other disclosable matters. To the extent permissible under applicable laws, VASPs providing Broker-Dealer Services shall publish on their website or by other publicly accessible means—
           
            a. details of any past convictions or prosecutions of any member[s] of their Senior Management or Board, whether before the courts of the UAE or the courts of another jurisdiction; and
            b. any such other information relating to their business or activities as VARA may reasonably require.
           
          3. The disclosure requirements set out in this Rule I.B of this Broker-Dealer Services Rulebook are in addition to all disclosures required under the Market Conduct Rulebook and to all notifications to VARA required under the Compliance and Risk Management Rulebook.
           

      • Part II – Trading and Execution Rules

        • A. Best Execution

          1. VASPs must exercise reasonable diligence to Execute each client order to buy or sell one or more Virtual Assets that it receives so as to obtain the most favourable price for the client under the prevailing market conditions, provided that due consideration is also given to costs, speed, likelihood of Execution and settlement, size, nature or any other consideration relevant to the Execution of the order to ensure the best possible result for the client.
          2. For the avoidance of doubt, Rule II.A.1 of this Broker-Dealer Services Rulebook applies to the handling of orders to buy or sell one or more Virtual Assets and does not apply where a VASP provides another VASP, a Qualified Investor or an Institutional Investor with a quote to Execute at the VASP’s discretion, whether that VASP is itself executing an order on behalf of a client or is dealing on its own account. Rule II.A.1 of this Broker-Dealer Services Rulebook does, however, apply where a VASP satisfies a client order by dealing as principal with the client.
          3. VASPs shall have written controls in place to ensure that the best Execution standard in Rule II.A.1 of this Broker-Dealer Services Rulebook is met and that any conflicts of interest either between competing client orders or between client orders and the interests of the VASP are managed appropriately.
          4. Among the factors that will be considered in determining whether a VASP has taken steps to obtain the best possible result for the purposes of Rule II.A.1 of this Broker-Dealer Services Rulebook are—
           
            a. the characteristics of the Market for the Virtual Asset [e.g. price, spreads, volatility, relative liquidity, and pressure on communications];
            b. the size and type of transaction;
            c. the number of Markets or other sources of liquidity checked;
            d. accessibility of quotes to trade in the Virtual Asset[s] in question under the market conditions prevailing at the relevant time, noting that, even in the event that certain sources of liquidity are not available, VASPs are not relieved from taking reasonable steps and employing their market expertise in seeking to achieve the best Execution of client orders; and
            e. the terms and conditions of the order which result in the transaction, as communicated to the VASP.
           
          5. Where a VASP Executes a client order off-Market by trading with another VASP or another third party, the burden of demonstrating compliance with the best Execution standard set out in Rule II.A.1 of this Broker-Dealer Services Rulebook shall remain with the VASP.
          6. When Executing client orders, VASPs shall disclose to their clients, both prior to Execution and in the trade confirmation, the portion of the amount payable by the client that is retained by the VASP as fees or commission for the trade, except where a VASP provides another VASP, a Qualified Investor or an Institutional Investor with a quote to Execute at the VASP’s discretion under Rule II.A.2 of this Broker-Dealer Services Rulebook.
          7. VASPs shall not pay or receive any monetary or non-monetary benefit, including by way of reciprocation for any service or business, to any third party in respect of its Execution services provided to a client, except for necessary service fees required to Execute the client’s order. In particular, VASPs shall not receive any remuneration, discount or non-monetary benefit for routing clients’ orders to a particular trading venue or to another Entity. Any fees payable by or to another VASP or other third party shall be structured in such a way so as not to give rise to conflicts of interest in respect of the Execution of client orders.
          8. For the avoidance of doubt, failure to maintain or adequately resource a department assigned to Execute clients’ orders cannot be considered justification for not complying with the Execution requirements in this Part II of this Broker-Dealer Services Rulebook.
          9. A VASP through which an order is channelled and that knowingly is a party to an arrangement whereby the initiating VASP has not fulfilled its obligations under this Part II of this Broker-Dealer Services Rulebook, will also be deemed to have violated this Part II.
          10. If a VASP receives an unsolicited instruction from a client to route that client’s order to a particular Market or counterparty for Execution, the VASP is not required to make a best Execution determination beyond the client's specific instruction, provided that the VASP processes the client’s order promptly in accordance with its terms.
          11. Where a client has directed that an order be routed to another specific VASP that is also Licensed by VARA, the receiving VASP to which the order was directed is required to meet the requirements in this Part II of this Broker-Dealer Services Rulebook with respect to its handling of the order.
          12. Each VASP must document its compliance with its policies and procedures related to its selection of the best Market for a Virtual Asset, including how to Execute client orders where there is an absence of pricing information, an absence of drivers or valuation factors behind such prices, or multiple quotations.
          13. No VASP can delegate to another Entity responsibility to provide best Execution to its client’s orders. VASPs that route client orders to other Entities for Execution on an automated, non-discretionary basis, as well as VASPs that internalise client order flows, must review [at least quarterly] the quality of Execution received by their clients, with reference to how such Execution quality compares with the Execution quality the VASP may have obtained from other Markets or sources of liquidity. In conducting each such reviews, VASPs must determine whether any material differences in Execution quality exist among the Virtual Assets trading and, if so, modify their routing arrangements or justify why they are not modifying their routing arrangements.
          14. VASPs that route their order flows to another Entity that has agreed to handle that order flow as agent for the client can rely on that Entity’s regular and rigorous review, as long as the rationale of the review is fully disclosed to the originating VASP.
          15. VASPs shall develop, implement and maintain systems to ensure that their systems have the capacity and capabilities to Execute client orders received through such systems or such other means as may be agreed with clients from time to time.
          16. VASPs must notify clients with whom they have an ongoing relationship of any material changes to their order Execution arrangements or their Execution policy.
           

        • B. Dealing as Principal

          1. VASPs shall be permitted to deal as principal [including as riskless principal] for the purpose of satisfying client orders, placing of Virtual Assets and/or managing the VASP’s inventory of Virtual Assets and other assets, subject to complying with the best Execution standard set out in Rule II.A.1 of this Broker-Dealer Services Rulebook above.
          2. For the avoidance of doubt, it is prohibited for a VASP, when dealing as principal or otherwise, to use or otherwise deal in Client Money or Client VAs except as expressly permitted under Parts IV and V of the Compliance and Risk Management Rulebook.
           

        • C. Placing and Distributing Virtual Assets

          1. VASPs providing services to an Issuer or otherwise in relation to the placing of Virtual Assets with investors must have written controls in place to prevent, monitor, manage and disclose any conflicts of interest when placing Virtual Assets with their own clients, including in relation to the pricing of the initial placement or distribution of those Virtual Assets.
          2. For the purposes of this Rule II.C of this Broker-Dealer Services Rulebook, the “placing” of Virtual Assets shall include any marketing conducted by a VASP for or on behalf of the Issuer of the VAs as well as the actual sale or placement of any Virtual Assets.
          3. Prior to agreeing a sale to any client or investor of newly issued Virtual Assets, VASPs shall disclose to that counterparty [and obtain consent from the Issuer allowing the VASP to disclose to the counterparty]—
           
            a. the basis on which they are acting for the Issuer, including whether they will receive any fees, incentives or non-monetary benefits from the Issuer or any third party in relation to the placement or distribution of the Virtual Assets;
            b. the timing of the issuance and settlement of the Virtual Assets; and
            c. information on the intended target market of the Virtual Assets.
           

        • D. Advisory Services

          1. VASPs providing Broker-Dealer Services may carry out Advisory Services in the Emirate, provided that they shall—
           
            a. continue to hold, and to comply with all requirements of, their Licence to carry out Broker-Dealer Services;
            b. comply with all Capital and Prudential Requirements in the Company Rulebook that apply to Advisory Services in addition to those required for Broker-Dealer Services; and
            c. comply with the Advisory Services Rulebook in respect of all Advisory Services.
           

      • Part III – Margin Trading Rules

        • A. Compliance with Margin Trading Rules

          1. VASPs may only provide Margin Trading services if explicitly authorised to do so by VARA and such authorisation is expressly stipulated in their Licence.
          2. VASPs that are authorised to provide Margin Trading services, must comply with this Part III of this Broker-Dealer Services Rulebook at all times when providing Margin Trading services.
          3. Margin Trading services may only be offered or provided to Qualified Investors and Institutional Investors.
          4. VASPs must not offer or provide Margin Trading services to a Retail Investor.
          5. VASPs must at all times ensure that they have sufficient Virtual Assets to provide Margin Trading services and can satisfy client obligations.
           

        • B. VARA Approval and Powers

          1. VARA may approve an application for the provision of Margin Trading services, provided that the VASP can demonstrate, to VARA’s satisfaction, compliance with the following requirements—
           
            a. the VASP has submitted for VARA’s approval details of the terms and conditions upon which it proposes to offer Margin Trading services to clients, including a copy of the template Margin Trading Agreement to be used by the VASP, together with information relating to the VASP’s financial condition and compliance with all Capital and Prudential Requirements applicable to the VASP;
            b. the VASP has established, and is able to demonstrate to VARA upon request, appropriate policies and procedures as well as systems and controls with regards to Margin Trading services, which shall include but not be limited to—
           
              i. the Margin which may be called, the applicable Margin rates and the method of calculating the Margin;
              ii. the acceptable methods of Margin payment and forms of collateral;
              iii. the circumstances under which a client or counterparty may be required to provide Margin and additional Margin, and the consequences of a failure to meet a Margin call, including the actions which the VASP may be entitled to take; and
              iv. applicable escalation procedures where a client or counterparty fails to meet Margin calls; and
           
            c. the VASP ensures, and is able to demonstrate to VARA upon request, that Virtual Assets collected as collateral for Initial Margin and Maintenance Margin purposes are liquid and can be liquidated within a reasonable timeframe.
           
          2. VARA may request to inspect the Margin Trading system of the VASP used to calculate clients’ Margin Trading positions and Margin and, prior to granting approval, request any other clarification, information or documents it deems necessary.
          3. Notwithstanding a VASP having approval from VARA for the provision of Margin Trading, VARA shall have the power to instruct VASPs to take any of the following actions, in its sole and absolute discretion from time to time, and VASPs must comply with such instructions—
           
            a. suspend Margin Trading services for specified Virtual Assets or clients;
            b. close existing client positions; and
            c. increase Initial Margin and/or Maintenance Margin requirements.
           

        • C. Margin Trading Obligations

          1. Without prejudice to any other obligations, VASPs providing Margin Trading services shall—
           
            a. obtain information from each client prior to opening a Margin Trading Account to determine whether the Margin Trading service is suitable for a particular client, including but not limited to such information on the client’s financial position [including financial solvency], investment objectives, risk appetite, knowledge and experience in trading in Virtual Asset markets as may be relevant and practical;
            b. ensure that each client’s Margin Trading Account is segregated from all other trading accounts;
            c. only use all Virtual Assets and/or cash balance in the Margin Trading Account as collateral for Margin Trading in accordance with the terms of the Margin Trading Agreement;
            d. not to utilise the funds of any client to provide the facilities of Margin Trading to another client, even if the client’s consent has been obtained by the VASP;
            e. ensure that each client has deposited the Initial Margin in the Margin Trading Account, in accordance with the agreed value, prior to the purchase of any Virtual Assets financed on Margin;
            f. ensure that, if a client has more than one [1] Margin Trading Account with the VASP, that all risk limits are monitored and maintained at the client level;
            g. provide each client with a written statement of account at least monthly showing the trading movement of the Virtual Assets financed on Margin and the percentage of their ownership in the Margin Trading Account relative to any Virtual Assets, cash or other assets held as Maintenance Margin;
            h. monitor on an ongoing basis the Margin Trading Account of each client and provide at least one [1] early warning notification to a client that the percentage of the client’s ownership in that account has fallen to a specified percentage and is at risk of falling below the required level of Maintenance Margin specified in the Margin Trading Agreement. The specified percentage at which such early warning notification must be given may be determined by the VASP acting in the best interests of its clients. Such notification must include a full re-statement of the risks required to be stated in the Margin Trading Agreement in Rule III.E.1.d of this Broker-Dealer Services Rulebook below;
            i. in addition to Rule III.C.1.h of this Broker-Dealer Services Rulebook above, monitor on an ongoing basis the Margin Trading Account of each client and notify the client promptly when the percentage of the client's ownership in that account falls below the required level of Maintenance Margin specified in the Margin Trading Agreement, so that they can cover the shortfall in the account, subject to Rule III.C.1.j of this Broker-Dealer Services Rulebook below;
            j. in the event that the client is not themselves able to remedy the shortfall within a reasonable timeframe, sell all or some of the Virtual Assets available in the Margin Trading Account to the extent required to restore the client’s percentage of ownership to the Maintenance Margin [or such higher level as may be set out in the Margin Trading Agreement] as per the market value of such Virtual Assets on the date of sale;
            k. obtain the prior approval of VARA on any subsequent amendment to the Margin Trading system described in Rule III.B.2 of this Broker-Dealer Services Rulebook above, and provide a technical report confirming that the amended system is able to fulfil the requirements of the Margin Trading service on an ongoing basis, including during times of high volatility; and
            l. ensure that orderly records are kept for the Margin Trading services undertaken by them for a period of at least eight [8] years.
           

        • D. Prudential Requirements, Initial Margin and Maintenance Margin

          1. VASPs authorised by VARA to provide Margin Trading services shall—
           
            a. ensure that the aggregate funds allocated for Margin Trading services by the VASP are included in the VASP’s calculation of its Operational Exposure; and
            b. ensure that the amount of credit extended to a single client for Margin Trading does not exceed one tenth of the total funds directly or indirectly attributable to Margin Trading by the VASP in its Operational Exposure, in accordance with Rule III.D.1.a of this Broker-Dealer Services Rulebook above.
           
          2. VASPs may only accept the following types of collateral in a Margin Trading Account—
           
            a. the Virtual Asset financed on Margin in that account;
            b. fiat currency; and
            c. Fiat-Referenced Virtual Asset referencing USD [or AED as approved by VARA] and where such Fiat-Referenced Virtual Asset, in all events, is backed by cash or cash equivalent [as defined in internationally recognised accounting standards] reserves denominated in the fiat currency referenced of not less than the market value of the Fiat-Referenced Virtual Asset in public circulation, or not yet redeemed.
           
          3. Notwithstanding Rule III.D.2 of this Broker-Dealer Services Rulebook, VASPs may accept the following types of collateral in a Margin Trading Account in the following circumstances—
           
            a. other Virtual Assets where there is a continuing fall in the market value of the Virtual Asset financed on Margin; and
            b. other Virtual Assets where trading in the Virtual Asset financed on Margin is suspended or discontinued for more than seven [7] Working Days or such other period prescribed by VARA.
           

        • E. Margin Trading Agreement

          1. The Margin Trading Agreement must include the following information—
           
            a. an explanation of the VASP’s responsibilities and the respective obligations of the VASP and the client including, but not limited to, termination rights, the effect of termination, applicable dispute resolution mechanisms and the VASP’s obligation to provide an early warning notification under Rule III.C.1.h of this Broker-Dealer Services Rulebook including when such notifications will be provided;
            b. whether the client has the right to withdraw cash from the Margin Trading Account, transfer amounts from the Margin Trading Account to the other account, or use such funds for new Margin financing if these amounts are higher than the Maintenance Margin;
            c. how all financing is calculated, including but not limited to how and when it is paid or payable, the applicable rate, or in the case of a variable rate, how it is calculated and how it may vary and how such variations will be communicated by the VASP to the client;
            d. an explanation of the following risks the client may be exposed to when undertaking Margin Trading, including but not limited to—
           
              i. the risk that the client may lose all or part of the funds deposited in the Margin Trading Account;
              ii. the fact that the VASP may request that the client add Virtual Assets and/or funds in the Margin Trading Account if the Maintenance Margin falls below the prescribed levels or if the VASP increases Maintenance Margin requirements;
              iii. the right of the VASP to sell all or part of the Virtual Assets in the Margin Trading Account if the Maintenance Margin falls below the percentage specified in the Margin Trading Agreement; and
              iv. when and how the VASP may sell all or part of the Virtual Assets in the Margin Trading Account;
           
            e. express consent from the client that they understand, acknowledge and accept each of the risks listed in Rule III.E.1.d of this Broker-Dealer Services Rulebook above;
            f. the applicable levels of Initial Margin and Maintenance Margin and circumstances in which Initial Margin and Maintenance Margin can be amended by the VASP;
            g. a breakdown of the commissions, charges and fees charged by the VASP relating to Margin Trading and when they are payable; and
            h. a confirmation of the client’s right to pay the cash balance of the price of the remaining Virtual Assets in the Margin Trading Account at any time.
           
          2. VARA may require any amendments to the Margin Trading Agreement or other forms relating to Margin Trading conducted by a VASP as it deems appropriate.
           

      • Schedule 1 – Definitions

        Term Definition
        “Advisory Services” has the meaning ascribed to it in Schedule 1 of the Regulations.
        “Advisory Services Rulebook” means the Advisory Services Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “Board” has the meaning ascribed to it in the Company Rulebook.
        “Broker-Dealer Services” has the meaning ascribed to it in Schedule 1 of the Regulations.
        “Broker-Dealer Services Rulebook” means this Broker-Dealer Services Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “Capital and Prudential Requirements” has the meaning ascribed to it in the Company Rulebook.
        “Client Money” has the meaning ascribed to it in the Compliance and Risk Management Rulebook.
        “Client VAs” has the meaning ascribed to it in the Compliance and Risk Management Rulebook.
        “Company Rulebook” means the Company Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “Compliance and Risk Management Rulebook” means the Compliance and Risk Management Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “Dubai VA Law” means Law No. [4] of 2022 Regulating Virtual Assets in the Emirate of Dubai, as may be amended from time to time.
        “Emirate” means all zones across the Emirate of Dubai, including Special Development Zones and Free Zones but excluding the Dubai International Financial Centre.
        “Entity” means any legal entity or individual.
        “Execute” or “Execution” means the exercise of a client order that results in a binding transaction.
        “Fiat-Referenced Virtual Asset”
        means a type of Virtual Asset that purports to maintain a stable value in relation to the value of one or more fiat currencies, can be digitally traded and functions as—
        [a] a medium of exchange;
        [b] a unit of account; and/or
        [c] a store of value,
        but does not have legal tender status in any jurisdiction. A Fiat-Referenced Virtual Asset is neither issued nor guaranteed by any jurisdiction, and fulfils the above functions only by agreement within the community of users of the Fiat-Referenced Virtual Asset.
        “Initial Margin”
        means the amount deposited by the client in the Margin Trading Account which shall be at least the greater of—
        [a] the Maintenance Margin; or
        [b] such greater amount as VARA may from time to time require for a specific VASP or Virtual Asset.
        “Institutional Investor” has the meaning ascribed to it in the Market Conduct Rulebook.
        “Issuer” has the meaning ascribed to it in the Regulations.
        “Licence” has the meaning ascribed to it in the Regulations.
        “Licensed” means having a valid Licence.
        “Maintenance Margin” means the margin that must be maintained in all Margin Trading Accounts which shall not be less than thirty percent [30%] of the market value of the VAs in the Margin Trading Account at any time after the purchase date, such greater amount as VARA may from time to time require for a specific VASP or Virtual Asset.
        “Margin” means any Initial Margin or Maintenance Margin provided by a client in support of Margin Trading services.
        “Margin Trading” means the financing made by a VASP of a proportion or multiple of the market value of the Virtual Assets financed on margin, and secured as collateral by the Virtual Assets available in the Margin Trading Account or any other collateral in the cases exclusively stated in these Rules.
        “Margin Trading Account” means a type of client account with the VASP, through which dealings in Virtual Assets financed on Margin are executed.
        “Margin Trading Agreement” means the agreement between the VASP and the client specifying the terms and conditions governing the relationship between them in relation to Margin Trading.
        “Market”
        means a variety of different venues, including but not limited to, market centres that are trading a particular Virtual Asset*.
        *This expansive interpretation is meant to inform VASPs providing Broker-Dealer Services as to the breadth of the scope of venues that must be considered in the furtherance of their best Execution obligations and to promote fair competition among VASPs providing Broker-Dealer Services, Exchange Services, as well as any other venue that may emerge, by not mandating that certain trading venues have less relevance than others in the course of determining a VASP’s best Execution obligations.
        “Market Conduct Rulebook” means the Market Conduct Rulebook issued by VARA pursuant to the Regulations, as may be amended VARA from time to time.
        “Market Offences” has the meaning ascribed to it in the Regulations.
        “Operational Exposure” has the meaning ascribed to it in the Company Rulebook.
        “Qualified Investor” has the meaning ascribed to it in the Market Conduct Rulebook.
        “Regulations” means the Virtual Assets and Related Activities Regulations 2023, as may be amended from time to time.
        “Retail Investor” has the meaning ascribed to it in the Market Conduct Rulebook.
        “Rule” has the meaning ascribed to it in the Regulations.
        “Rulebook” has the meaning ascribed to it in the Regulations.
        “Senior Management” has the meaning ascribed to it in the Company Rulebook.
        “Technology and Information Rulebook” means the Technology and Information Rulebook issued by VARA pursuant to the Regulations, as may be amended VARA from time to time.
        “UAE” means the United Arab Emirates.
        “VA Activity” means the activities listed in Schedule 1 of the Regulations, as may be amended from time to time.
        “VARA” means the Dubai Virtual Assets Regulatory Authority.
        “VASP” means an Entity authorised by VARA to conduct VA Activity[ies] in the Emirate.
        “Virtual Asset” or “VA” has the meaning ascribed to it in the Dubai VA Law.
        “Working Day” has the meaning ascribed to it in the Regulations.

         

    • Custody Services Rulebook

      • Introduction

        The Dubai Virtual Assets Regulatory Authority [VARA] was established and authorised by Law No. [4] of 2022 Regulating Virtual Assets in the Emirate of Dubai [Dubai VA Law] to regulate Virtual Asset Service Providers [VASPs].
         
        This Custody Services Rulebook is issued pursuant to, and forms part of, the Virtual Assets and Related Activities Regulations 2023 [the Regulations] issued by VARA and applies to all VASPs Licensed by VARA to carry out Custody Services in the Emirate.
         
        This Custody Services Rulebook applies in addition to all other requirements in the Regulations as may be in force from time to time. As such, VASPs Licensed by VARA to carry out Custody Services must also comply with the following Rulebooks applicable to all VASPs:
         
          1. Company Rulebook;
          2. Compliance and Risk Management Rulebook;
          3. Technology and Information Rulebook;
          4. Market Conduct Rulebook; and
          5. All Rulebooks specific to the VA Activities that a VASP is Licensed by VARA to carry out.
         
        As stated in Rule III.B.5 of this Custody Services Rulebook, VASPs providing Custody Services must be an independent legal Entity - separate from any member of their Group that provides other VA Activities or linked services. Where a VASP’s Group is Licensed by VARA to carry out other VA Activities in the Emirate in addition to Custody Services, it must comply with all Rulebooks that apply to each of those other VA Activities. Unless otherwise stated, the Rules in VA Activity-specific Rulebooks apply collectively for each VA Activity the VASP carries out.
        Capitalised terms in this Custody Services Rulebook have the meanings ascribed to them in the Regulations or as otherwise provided in Schedule 1.
         

      • Part I – Additional Board Requirements

        • A. Board Constitution

          1. The Board of a VASP providing Custody Services shall consist of executive directors and non-executive directors, with a minimum of one [1] director qualifying as an independent director as set out below.
          2. The Board of a VASP providing Custody Services shall convene at least on a quarterly basis.
          3. VASPs providing Custody Services shall mandate the length of each term, and number of terms each Board member may serve on the Board.
          4. A Board member is not regarded as an independent director of a VASP if—
           
            a. they or any of their first-degree relatives are working or have worked as a member of the Senior Management, or held a role in the VASP’s Group equivalent to Senior Management within the two [2] years preceding the date of their nomination to the Board;
            b. they or any of their first-degree relatives have a direct or indirect interest in the contracts and projects concluded with the Group during the preceding two [2] years, provided that the aggregate value of such contracts and projects do not exceed the lower of [i] ten percent [10%] of the Paid-Up Capital of the VASP, or [ii] the amount of AED 5,000,000 or its equivalent in other foreign currency, unless such contracts and projects relate to the ordinary course of business of the VASP and do not contain any preferential conditions;
            c. they are working or have worked for the Group during the two [2] years preceding the date of their appointment to the Board;
            d. they work for, or are a partner of a company that performs consultancy services for the VASP or any members of its Group, or has performed such services during the preceding two [2] years;
            e. they have any personal service contracts with the VASP or any members of its Group, or have had such contract during the preceding two [2] years, excluding any contract under which they are appointed as a non-executive director;
            f. they are directly or indirectly linked to any Entity that receives substantial funding from the VASP’s Group;
            g. they or any of their first-degree relatives are a partner or an employee of the auditor of the VASP, or if, during the two [2] years preceding the date of their Board membership, were a partner or an employee of the auditor of the VASP; 
            h. the ownership held by them and their first-degree relatives reaches ten percent [10%] or more of the share capital of the VASP;
            i. they have served more than seven [7] years as a Board member of the VASP; or
            j. they are the representative of an investor in the VASP holding ten percent [10%] or more of the share capital of the VASP.
           

        • B. Board Committees

          1. The Board of a VASP providing Custody Services shall establish remuneration, nomination and audit committees, and may establish additional committees, to perform certain delegated functions on behalf of the Board. The Board may delegate specific authority, but not its responsibilities, to such committees, provided that it continuously monitors and oversees the work conducted by all committees.
          2. Each committee created by the Board of a VASP providing Custody Services shall—
           
            a. have a charter or other instrument that sets out its membership, mandate, scope, working procedures and means of accountability to the Board; and
            b. report to the Board on findings and recommendations relating to the work entrusted by the Board to it regularly.
           
          3. The Board and its committees shall keep minutes to record details of the matters discussed, recommendations made, decisions taken, resolutions passed, and any dissenting opinions at a Board meeting for a period, notwithstanding any requirements in any law or regulations, of not less than eight [8] years.
           

        • C. Board Remuneration Reporting Requirements

          1. On an annual basis, VASPs providing Custody Services shall submit to VARA the following information—
           
            a. details of all compensation and/or remuneration of all members of the Board and its committees, including but not limited to salaries, allowances, expenses, bonuses, benefits, or other incentive programmes [whether or not denominated in Virtual Assets]. Such details shall include the type, nature and conditions of all such compensation and/or remuneration; and
            b. reasons for all such compensation and/or remuneration.
           
          2. All information submitted by VASPs in compliance with Rule I.C.1 of this Custody Services Rulebook shall be kept confidential by VARA, except to the extent that disclosure is required to comply with any applicable laws or regulations.
           

      • Part II – Policies, Procedures and Public Disclosures

        • A. Policies and Procedures

          1. In addition to all other requirements in the Regulations and Rulebooks, VASPs providing Custody Services shall establish, implement and enforce appropriate written internal policies and procedures relating to the following—
           
            a. the ability of clients to have access to and withdraw their Virtual Assets including, but not limited to, during periods of high uncertainty and/or extreme volatility; and
            b. such other policies or procedures as VARA may require from time to time.
           
          2. VASPs providing Custody Services shall assess and, in any case, at least yearly review the effectiveness of their policies and procedures, and take appropriate measures to address any deficiencies.
           

        • B. Public Disclosures

          1. VASPs providing Custody Services shall publish on their website in a prominent place or make available by other publicly accessible means—
           
            a. a detailed description of any actual or potential conflicts of interest arising out of their activities, and how these are managed;
            b. their policies and procedures relating to data privacy, whistleblowing and handling of client complaints; and
            c. a statement of whether the VASP has accounts, funds or Virtual Assets maintained by a third party and if so, provide the identity of that third party.|
           
          2. Other disclosable matters. To the extent permissible under applicable laws, VASPs providing Custody Services shall publish on their website or by other publicly accessible means—
           
            a. details of any past convictions or prosecutions of any member[s] of their Senior Management or Board, whether before the courts of the UAE or the courts of another jurisdiction; and
            b. any such other information relating to their business or activities as VARA may reasonably require.
           
          3. The disclosure requirements set out in this Rule II.B of this Custody Services Rulebook are in addition to all disclosures required under the Market Conduct Rulebook, and to all notifications to VARA required under the Compliance and Risk Management Rulebook.
           

      • Part III – VA Storage and Custody Rules

        • A. General Requirements

          1. VASPs that provide Custody Services must comply with the provisions in this Part III of this Custody Services Rulebook.
          2. To the extent any provisions are inconsistent with the Client VA Rules in the Compliance and Risk Management Rulebook, this Part III of this Custody Services Rulebook shall have precedence.
          3. VASPs must ensure that all Custody Services are only provided in accordance with verified client instructions.
           

        • B. Segregation and Control

          1. Virtual Assets held by a VASP providing Custody Services are not depository liabilities or assets of the VASP.
          2. VASPs shall not authorise or permit rehypothecation of Virtual Assets for which they provide Custody Services [regardless of whether they have obtained a client’s consent], and VASPs providing Custody Services shall not seek or attempt to obtain such consent as part of the Custody Services they provide.
          3. VASPs providing Custody Services shall segregate the Virtual Assets of each client in separate VA Wallets containing the Virtual Assets of that client only.
          4. VASPs must maintain control of each Virtual Asset at all times while providing Custody Services.
          5. VASPs providing Custody Services must be a separate legal Entity from any member of their Group that provides services relating to VA Activities other than Custody Services, and must implement and strictly enforce policies and procedures to achieve necessary segregation between operations relating to Custody Services, and all other businesses.
          6. VASPs must have adequate policies and procedures to ensure that there is sufficient operational and physical segregation between individuals handling operations for Custody Services, and their other core businesses and operations including, but not limited to, other VA Activities conducted by their Group. Such policies and procedures shall establish a separate team to handle the VASP’s Custody Services only, consisting of individuals who have no conflicting duties or access to information which may give rise to any conflicts of interest.
           

        • C. VA Wallet Management

          1. Hot and cold Virtual Asset storage.
           
            a. VASPs providing Custody Services shall at all times maintain appropriate certifications as may be required under industry best practices applicable to the safekeeping of Virtual Assets.
            b. VASPs providing Custody Services should conduct a risk-based analysis to determine the method of Virtual Asset storage including different types of VA Wallets [e.g. hot versus cold storage].
            c. VASPs providing Custody Services should document in detail, the methodologies and behaviour determining the transfer of Virtual Assets between different types of VA Wallets [e.g. hot, cold and warm wallets]. The mechanisms for transfer between different types of VA Wallets should be well documented, and subject to internal controls and audits performed by an independent third-party auditor, ensuring compliance with Rule ‎III.C.1.a of this Custody Services Rulebook.
           
          2. Seed or key generation, storage, and use.
           
            a. When creating any seed, asymmetric private and public key combinations, or other similar mechanisms required for providing Custody Services, VASPs shall use industry best standards to create the seed, asymmetric private and public key combinations, or other similar mechanisms to ensure a secure generation mechanism. In addition, all VASPs providing Custody Services shall consider all risks associated with producing a private key or seed for a signatory including whether the signatory should be involved in the generation process or whether creators of the seed, private key, or other similar mechanism should be prohibited from cryptographically signing any transaction or from having access to any relevant systems.
            b. VASPs providing Custody Services shall adopt industry best practices when using encryption, and secure device storage for a client’s private keys when not in use. VASPs must ensure that any keys stored online or in one physical location are not capable of conducting a Virtual Asset transaction, unless appropriate controls are in place to ensure that physical access itself by an individual is insufficient to conduct a transaction.
            c. All key and seed backups must be stored in a separate location from the primary key and seed. Key and seed backups must be stored with encryption at least equal to the encryption used to protect the primary seed and key. If VASPs use mnemonic back-up seed phrases, it should ensure that the mnemonic back-up seed phrase is broken into at least two [2] parts. Any backups that when combined could facilitate a transaction, must not be stored in a single point of access.
            d. VASPs providing Custody Services should consider using multi-signature approaches where appropriate. VARA reserves the right to require VASPs to use multi-signature approaches in specific situations, including for specific types of Virtual Assets. If a VASP has multi-signature arrangements that vary depending on the risk of the transaction, the VASP must have well-documented and audited procedures.
            e. VASPs providing Custody Services must mitigate the risk of collusion between all authorised parties or signatories who are able to authorise the movement, transfer or withdrawal of Virtual Assets held under custody on behalf of clients. The risk of collusion and other internal points of failure should be evaluated for materiality and probability, and effectively addressed during recurring operational risk assessments.
           
          3. Lost or stolen keys.
           
            a. VASPs providing Custody Services shall establish, and maintain effective policies and procedures in the event that any seed or cryptographic keys of any VA Wallet are lost or otherwise compromised. Such policies and procedures shall address matters including but not limited to—
           
              i. recovery of affected Virtual Assets;
              ii. timely communications with all clients and counterparties regarding consequences arising from relevant incidents, and measures being taken to remedy such consequences;
              iii. cooperation with law enforcement agencies and regulatory bodies; and
              iv. if applicable, preparation of wind-down arrangements and public disclosure of such arrangements.
           

        • D. Additional Obligations

          1. Written agreements with clients.
           
            a. In addition to all applicable requirements in the Market Conduct Rulebook, Client Agreements entered into between VASPs providing Custody Services and clients should include the following—
           
              i. description of the overall custodial framework used by the VASP when providing Custody Services, including but not limited to security, risk mitigation, safeguarding procedures;
              ii. address what will happen when source code versions underlying a Virtual Asset supported by the VASP materially change in a way that may affect the Custody Services provided [e.g. a “fork” of the network protocol], including but not limited to—
           
                1. notification requirements if the VASP will not support the original source code version;
                2. notification requirements if the VASP will support the original source code version;
                3. notification requirements if the original source code version will no longer exist, or is not reasonably expected to continue to exist, or if the original source code version will no longer function securely and/or as originally intended; and
                4. actions that will be taken by the VASP if any/all of the above were to take place;
           
              iii. when and how the Virtual Assets under custody will be returned;
              iv. settlement finality, including when a Virtual Asset will be deemed fully transferred, and the VASP discharged of any obligations upon transfer of the Virtual Asset [including but not limited to withdrawals initiated by the client];
              v. the frequency of account statements to be provided to clients, and the content of those statements;
              vi. who [e.g. the VASP, its agent or another third party] is responsible for securing the Virtual Assets, and protecting them from theft or loss;
              vii. the VASP’s Outsourcing practices including, if the VASP Outsources some or all of the Custody Services to third parties, the qualifications of those third parties;
              viii. the VASP’s cybersecurity and data privacy policies, procedures, controls and systems, including how the VASP will respond to data breaches and cyberattacks, and notification, reimbursement and remediation policies; and
              ix. the VASP’s policies and procedures for safeguarding access to Virtual Assets, including policies and procedures related to multi-signature/multi-key safeguards, access management controls, and revocation of key signtories’ access.
           
          2. Relationship between a VASP and client, for the provision of Custody Services.
           
            a. The provision of Custody Services shall be a contractual arrangement between a VASP and a client, under which a client lawfully in control of, or entitled to control, a Virtual Asset, transfers control of the Virtual Asset to a VASP, solely for the purpose of receiving Custody Services, and does not in any way transfer to the VASP, any legal interest in the Virtual Asset, or any discretionary authority not explicitly authorised in the Client Agreement or otherwise agreed to by the client.
            b. In addition to all Reserve Assets requirements in the Company Rulebook, VASPs providing Custody Services will keep a register, and record of reconciliation of each client’s positions that correspond to the client’s rights to the Virtual Assets that are subject to the Custody Services.
           
          3. Outsourcing and third-party suppliers.
           
            a. If a VASP Outsources some or all of the Custody Services to third parties, the VASP is responsible for ensuring that all applicable laws, Regulations, Rules and Directives are complied with.
            b. VASPs must have established roles and responsibilities for its Custody Services operations, and its operational risk management. The responsibility for manually executed core functions of Custody Services, should only be performed by authorised employees.
           
          4. Account statements. VASPs providing Custody Services must provide at least every month, and promptly at the request of a client, a statement with all Virtual Asset transactions specific to each client account, the dates and transaction amounts of the corresponding transactions, and balances and value for each type of Virtual Asset.
          5. Audit. VASPs should maintain a full audit trail of all transaction activities that occur on a client’s account for at least eight [8] years. The audit trail should include specific information regarding each transaction, such as the date and time, the transaction type, the relevant signatories, and the Virtual Assets involved.
           

      • Part IV – Staking from Custody Services Rules

        • A. Compliance with Staking from Custody Services Rules

          1. VASPs Licensed by VARA to carry out Custody Services may only provide Staking from Custody Services, if explicitly authorised to do so by VARA, and such authorisation is expressly stipulated in their Licence. VASPs will be subject to licensing and/or supervision fees incremental to the fees for Custody Services in Schedule 2 of the Regulations, or other fees published by VARA, as amended from time to time, in order to be able to undertake the regulated activity of Staking from Custody Services.
          2. VASPs that are authorised to provide Staking from Custody Services must comply with this Part IV of this Custody Services Rulebook, at all times, when providing these services.
          3. Staking from Custody Services is regarded by VARA to form part of the Custody Services that a VASP provides. As such, all VASPs providing Staking from Custody Services must continue to comply with all other Rules relating to Custody Services throughout the provision of Staking from Custody Services, for all Virtual Assets to which the Staking from Custody Services relate.
          4. For the avoidance of doubt, VASPs Licensed by VARA to carry out Custody Services that are also authorised to provide Staking from Custody Services, may only provide Staking from Custody Services for Virtual Assets for which they are providing Custody Services.
          5. VASPs Licensed by VARA to carry out Custody Services that are also authorised to provide Staking from Custody Services, may provide Staking from Custody Services through the same legal Entity. For avoidance of doubt, such authorisation for, and provision of Staking from Custody Services is considered to be sub-set of the Custody Services Activity, and is hence not subject to the requirement for a separate legal Entity stipulated under Rule III.B.5 of this Custody Services Rulebook.
          6. VARA shall have the right to suspend or revoke any authorisation granted to a VASP to provide Staking from Custody Services, in respect of any specific DLT, or in its entirety across all DLTs, upon reasonable grounds VARA deems appropriate.

        • B. Client instructions

          1. VASPs providing Staking from Custody Services must comply with Rule III.A.3 of this Custody Services Rulebook, and continue to act only on explicit instructions received from their clients throughout the provision of such services, including when they are required to vote or otherwise participate in the governance of any DLT on behalf of their clients.
          2. If a VASP wishes to obtain and rely on any pre-authorised instruction from a client, the VASP must consider all reasonably foreseeable circumstances where such instruction is likely to be used by the VASP as authorisation, and the VASP must communicate all such circumstances clearly to the client, prior to the client providing such instruction.  All pre-authorised instructions sought or obtained by a VASP must be sufficiently detailed, accurate and relevant for the client to understand both the circumstances in, and actions for which such instructions will be relied upon by the VASP.
          3. Staking from Custody Services cannot be provided on an ‘opt-out’ basis, and the activity may only be initiated after the VASP has received a client’s specific instruction to do so.

        • C. Segregation and safekeeping of Virtual Assets

          1. Segregated client VA Wallets. VASPs providing Staking from Custody Services must ensure that each client’s Virtual Assets remain segregated in separate VA Wallets containing the Virtual Assets of that client only, throughout the provision of such Staking from Custody Services, as required under Rule III.B.3 of this Custody Services Rulebook.
          2. Single client per node. VASPs providing Staking from Custody Services must ensure that no client’s Virtual Assets are pooled or otherwise combined with Virtual Assets of any other clients of the VASP or any other party[ies], whether to meet any minimum requirements of a given DLT or otherwise, and each node or instance of a DLT managed, operated or otherwise made available by the VASP may only hold, be delegated, or have committed to it, Virtual Assets belonging to that client only.
          3. Safekeeping of Virtual Assets. VASPs providing Staking from Custody Services remain responsible to their clients for the safekeeping of the Virtual Assets for which Staking from Custody Services is being provided.
          4. Control of withdrawal keys. VASPs providing Staking from Custody Services must maintain control of the cryptographic keys and/or other mediums or methods through which the Virtual Assets may be withdrawn, or otherwise no longer ‘staked’.

        • D. Node management

          1. VASPs providing Staking from Custody Services must use all commercially reasonable endeavours to ensure all operational, maintenance or other requirements for participation [including, but not limited to, hardware, software, connectivity and upgrades of the same] determined by the relevant DLT are met in respect of Staking from Custody Services, in order to minimise the risk of ‘slashing’ or other penalties being incurred in respect of the Virtual Assets, for which the VASP is providing such Staking from Custody Services.
          2. VA Wallet management. VASPs providing Staking from Custody Services shall continue to comply with all requirements in Rule III.C of this Custody Services Rulebook, and the above Rule IV.D.1 of this Custody Services Rulebook applies in addition to those requirements.
          3. Outsourcing. In addition to the requirements in Rule III.D.3 of this Custody Services Rulebook, VASPs shall ensure that all third-party services used by the VASP in the provision of Staking from Custody Services, comply with Part IV of the Company Rulebook.

        • E. DLT Standards

          1. VASPs providing Staking from Custody Services shall establish standards for the DLTs for which it provides, or the DLTs it uses to provide Staking from Custody Services [DLT Standards].
          2.

          DLT Standards shall include, but not be limited to—
           

          a. security and immutability of the DLT protocol, including its level of centralisation, reliance on a single Entity, or any potential single points of failure;
          b. operating history of the DLT, including any periods of disruption or downtime;
          c. soundness of the staking protocol and operation, including the duration for which it has successfully been active;
          d. source of any rewards being offered by the DLT or any other party for a user’s participation, including whether such rewards are derived from the fees paid by users of the DLT, or from other means;
          e. the VASP’s ability to maintain all operational, maintenance or other requirements for participation;
          f. its design, features and use cases, whether or not intended by relevant developers;
          g. any features that present a risk of materially affecting a VASP’s compliance with applicable laws, Regulations, Rules or Directives, including but not limited to those relating to AML/CFT, sanctions, security and intellectual property;
          h. regulatory treatment by VARA and other appropriate authorities [including those outside of the Emirate];
          i. future development plans [e.g. “roadmap”] of the DLT as communicated by relevant developers, and whether such developments may have an impact [positive or negative] on, or relevance to, any of the above factors;
          j. potential or actual conflicts of interest that may arise should a VASP provide any Staking from Custody Services in relation to the DLT, and relevant mitigations provisioned for such instances;
          k. background of the founders, management, and current core developers of the DLT, including, but not limited to, relevant experience in the Virtual Asset sector, and whether they have been subject to any investigations, penalties, or claims in relation to fraud or deceit etc.; and
          l. any additional factors that the VASP may require to be considered.
           
          3. VASPs providing Staking from Custody Services shall take all reasonable steps, including but not limited to conducting relevant due diligence, prior to the provision of such services in respect of a DLT, to ensure the DLT meets all their prescribed DLT Standards.
          4. VASPs providing Staking from Custody Services must actively monitor all DLTs for which Staking from Custody Services is provided, for continued compliance with their DLT Standards.
          5.

          Upon becoming aware that a DLT no longer meets a VASP’s prescribed DLT Standards, the VASP must—
           

          a. notify all affected clients and VARA immediately;
          b. cease accepting new Virtual Assets for Staking from Custody Services in respect of that DLT immediately;
          c. determine a course of action with such affected clients to cease all Staking from Custody Services for that DLT, as soon as practicable;
          d. continue to provide such Staking from Custody Services in accordance with this Part IV of this Custody Services Rulebook throughout the agreed course of action, and until such services have been effectively concluded;
          e. keep VARA informed of all actions being taken throughout such course of action; and
          f. take all other steps as VARA may direct.
           
          6. VASPs providing Staking from Custody Services shall also set and implement conditions, under which the VASP will suspend accepting new Virtual Assets for Staking from Custody Services which, as required under Rule IV.E.5 of this Custody Services Rulebook above, must include where a DLT no longer meets the VASP’s DLT Standards.
          7. VASPs must maintain all records relevant to such assessments under this Rule IV.E of this Custody Services Rulebook for eight [8] years, and provide such records for VARA’s inspection upon request.
           

        • F. Risk disclosure statement

          1. VASPs providing Staking from Custody Services must provide each client with a risk disclosure statement explaining (i) that Virtual Assets for which Staking from Custody Services is being provided, may be at risk of loss, reduction or penalty, (ii) the types and nature of such risks, (iii) the circumstances in which such risks may arise, and (iv) the likelihood and severity of consequences that may be suffered.
          2. The risk disclosure statement required under Rule IV.F.1 above, of this Custody Services Rulebook must be separate from the Client Agreement, and VASPs must independently obtain confirmation of the acceptance of such risk disclosure statement from each client, prior to the VASP providing Staking from Custody Services to that client.
           

        • G. Client Agreements

          1.

          In addition to all requirements in respect of Client Agreements in the Market Conduct Rulebook, and under Rule III.D of this Custody Services Rulebook, VASPs providing Staking from Custody Services shall include the following, to the extent applicable, in Client Agreements in respect of Staking from Custody Services—
           

          a. a description of the Virtual Assets for which Staking from Custody Services is being provided to such extent that the details are sufficient to identify them;
          b. operational, maintenance or other requirements for participation [including but not limited to hardware, software and connectivity] of the DLT[s], for which Staking from Custody Services is being provided, and that the VASP undertakes the responsibility to meet those requirements when providing such services. This Rule IV.G.1.b of this Custody Services Rulebook can be largely met by providing links to publicly available sources of where such information is officially maintained, for example DLT website or source code repository etc.;
          c. respective rights of the VASP, the client and any other Entity involved in the Staking from Custody Services, in respect of Virtual Assets that are the subject of the Client Agreement;
          d. a detailed description of the source of all rewards received by clients from the Staking from Custody Services, including whether such rewards are generated solely from fees paid by users of the DLT, or whether such rewards are derived from any other source;
          e. proceeds to be paid or become payable, and in the case of variable proceeds, the method of calculation, factors that impact the amount, volatility and timing of the proceeds, and how and when such variations will be communicated by the VASP to its clients, including all rights that the client has to influence decisions at each stage;
          f. all fees to be charged for Staking from Custody Services, and the calculation thereof;
          g. rights of the client to withdraw or directly control decisions pertaining to any Virtual Assets, in respect of which Staking from Custody Services is provided, and any conditions/ circumstances under which the client may be unable to do so;
          h. statement explaining that Virtual Assets in respect of which Staking from Custody Services is provided may be at risk, including the types and nature of such risks, as well as the likelihood and severity of any losses that may be suffered;
          i. rights, if any, of the VASP to vary the terms of the Client Agreement;
          j. rights of the VASP and the client to terminate the Client Agreement, circumstances under which these rights can be activated, and the consequences of such termination;
          k. full details of the VASP’s client complaints procedure; and
          l. statement explaining whether the VASP receives any remuneration, discount or other benefit for using any third party [with a disclosure of specific Entities where applicable], in the course of the provision of the Staking from Custody Services.

      • Schedule 1– Definitions

        Term Definition
        “Client Agreements” has the meaning ascribed to it in the Market Conduct Rulebook.
        “Company Rulebook” means the Company Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “Compliance and Risk Management Rulebook” means the Compliance and Risk Management Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “Custody Services” has the meaning ascribed to it in Schedule 1 of the Regulations.
        “Custody Services Rulebook” means this Custody Services Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “Directive” has the meaning ascribed to it in the Regulations.
        “DLT Standards” has the meaning ascribed to it in Rule IV.E.1 of this Custody Services Rulebook.
        “Dubai VA Law” means Law No. [4] of 2022 Regulating Virtual Assets in the Emirate of Dubai, as may be amended from time to time.
        “Emirate” means all zones across the Emirate of Dubai, including Special Development Zones and Free Zones but excluding the Dubai International Financial Centre.
        “Entity” means any legal entity or individual.
        “Group” has the meaning ascribed to it in the Company Rulebook.
        “Licence” has the meaning ascribed to it in the Regulations.
        “Licensed” means holding a valid Licence.
        “Market Conduct Rulebook” means the Market Conduct Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “Outsourcing” has the meaning ascribed to it in the Company Rulebook.
        “Paid-Up Capital” has the meaning ascribed to it in the Company Rulebook.
        “Regulations” means the Virtual Assets and Related Activities Regulations 2023, as may be amended from time to time.
        “Reserve Assets” has the meaning ascribed to it in the Company Rulebook.
        “Rule” has the meaning ascribed to it in the Regulations.
        “Rulebook” has the meaning ascribed to it in the Regulations.
        “Staking from Custody Services” means ‘staking’ or otherwise using, committing, pledging or locking up Virtual Assets, for which the VASP is providing Custody Services, for the purposes of participating in the consensus mechanisms or other maintenance, operation or functioning of a DLT to which those Virtual Assets relate, and may include receiving rewards generated and distributed for that participation.
        “Senior Management” has the meaning ascribed to it in the Company Rulebook.
        “UAE” means the United Arab Emirates.
        “VA Activity” means the activities listed in Schedule 1 of the Regulations, as may be amended from time to time.
        “VARA” means the Dubai Virtual Assets Regulatory Authority.
        “VASP” means an Entity Licensed by VARA to conduct VA Activity[ies] in the Emirate.
        “Virtual Asset” or “VA” has the meaning ascribed to it in the Dubai VA Law.
        “VA Wallet” has the meaning ascribed to the term “Virtual Asset Wallet” in the Dubai VA Law.

         

    • Exchange Services Rulebook

      • Introduction

        The Dubai Virtual Assets Regulatory Authority [VARA] was established and authorised by Law No. [4] of 2022 Regulating Virtual Assets in the Emirate of Dubai [Dubai VA Law] to regulate Virtual Asset Service Providers [VASPs].
         
        This Exchange Services Rulebook is issued pursuant to, and forms part of, the Virtual Assets and Related Activities Regulations 2023 [the Regulations] issued by VARA and applies to all VASPs Licensed by VARA to carry out Exchange Services in the Emirate.
         
        This Exchange Services Rulebook applies in addition to all other requirements in the Regulations as may be in force from time to time. As such, VASPs Licensed by VARA to carry out Exchange Services must also comply with the following Rulebooks applicable to all VASPs:
         
          1. Company Rulebook;
          2. Compliance and Risk Management Rulebook;
          3. Technology and Information Rulebook;
          4. Market Conduct Rulebook; and
          5. All Rulebooks specific to the VA Activities that a VASP is Licensed by VARA to carry out.
         
        Where a VASP is Licensed by VARA to carry out other VA Activities in the Emirate in addition to Exchange Services, it must comply with all Rulebooks which apply to those other VA Activities. Unless otherwise stated, the Rules in VA Activity specific Rulebooks apply cumulatively for each VA Activity a VASP carries out.
         
        Capitalised terms in this Exchange Services Rulebook have the meanings ascribed to them in the Regulations or as otherwise defined herein or provided in Schedule 1.
         

      • Part I – Additional Board Requirements

        • A. Board Constitution

          1. The Board of a VASP providing Exchange Services shall consist of executive directors and non-executive directors, with a minimum of one [1] director qualifying as an independent director as set out below.
          2. The Board of a VASP providing Exchange Services shall convene at least on a quarterly basis.
          3. VASPs providing Exchange Services shall mandate the length of each term and number of terms each Board member may serve on the Board.
          4. A Board member is not regarded as an independent director of a VASP if—
           
            a. they or any of their first degree relatives are working or have worked as a member of the Senior Management, or held a role in the VASP’s Group equivalent to Senior Management within the preceding two [2] years preceding the date of their nomination to the Board;
            b. they or any of their first degree relatives have a direct or indirect interest in the contracts and projects concluded with the Group during the preceding two [2] years, provided that the aggregate value of such contracts and projects do not exceed the lower of [i] ten percent [10%] of the Paid-Up Capital of the VASP or [ii] the amount of AED 5,000,000 or its equivalent in other foreign currency, unless such contracts and projects relate to the ordinary course of business of the VASP and do not contain any preferential conditions;
            c. they are working or have worked for the Group during the preceding two [2] years preceding the date of their appointment to the Board;
            d. they work for, or are a partner of, a company that performs consultancy services for the VASP or any members of its Group, or has performed such services during the preceding two [2] years;
            e. they have any personal service contracts with the VASP or any members of its Group, or have had such contract during the preceding two [2] years, excluding any contract under which they are appointed as a non-executive director;
            f. they are directly or indirectly linked to any Entity that receives substantial funding from the VASP’s Group;
            g. they or any of their first degree relatives are a partner or an employee of the auditor of the VASP, or if, during the preceding two [2] years preceding the date of their Board membership, were a partner or an employee of the auditor of the VASP;
            h. the ownership held by them and their first degree relatives reaches ten percent [10%] or more of the share capital of the VASP;
            i. they have served more than seven [7] years as a Board member of the VASP; or
            j. they are the representative of an investor in the VASP holding ten percent [10%] or more of the share capital of the VASP.
           

        • B. Board Committees

          1. The Board of a VASP providing Exchange Services shall establish remuneration, nomination and audit committees, and may establish additional committees to perform certain delegated functions on behalf of the Board. The Board may delegate specific authority, but not its responsibilities, to its committees, provided that it continuously monitors and oversees the work conducted by all committees.
          2. Each committee created by the Board of a VASP providing Exchange Services shall—
           
            a. have a charter or other instrument that sets out its membership, mandate, scope, working procedures and means of accountability to the Board; and
            b. report to the Board on findings and recommendations relating to the work entrusted by the Board to it regularly.
           
          3. The Board and its committees shall keep minutes to record details of the matters discussed, recommendations made, decisions taken, resolutions passed and any dissenting opinions at a Board meeting for a period of, notwithstanding any requirements in any law or regulations, not less than eight [8] years.
           

        • C. Board Remuneration Reporting Requirements

          1. On an annual basis, VASPs providing Exchange Services shall submit to VARA the following information—
           
            a. details of all compensation and/or remuneration of all members of the Board and its committees, including but not limited to salaries, allowances, expenses, bonuses, benefits, or other incentive programmes [whether or not denominated in Virtual Assets]. Such details shall include the type, nature and conditions of all such compensation and/or remuneration; and
            b. reasons for all such compensation and/or remuneration.
           
          2. All information submitted by VASPs in compliance with Rule I.C.1 of this Exchange Services Rulebook shall be kept confidential by VARA, except to the extent that disclosure is required to comply with any applicable laws or regulations.
           

      • Part II – Policies, Procedures and Public Disclosures

        • A. Policies and Procedures

          1. In addition to all other requirements in the Regulations and Rulebooks, VASPs providing Exchange Services shall establish, implement and enforce appropriate written internal policies and procedures relating to the following—
           
            a. the prohibition, detection, prevention and/or deterrence of Market Offences and any other abusive practices within their business or using their services, including but not limited to relevant internal rules, compliance programmes, sanctioning policies and powers;
            b. the ability of clients to have access to and withdraw their Virtual Assets including, but not limited to, during periods of high uncertainty and/or extreme volatility;
            c. settlement, delivery and clearing;
            d. establishing and amending the method of determining the price of Virtual Assets, including the use of market data to ensure the integrity and reliability of the determined price; and
            e. such other policies and procedures as VARA may require from time to time.
           
          2. VASPs providing Exchange Services shall assess and, in any case, at least yearly review the effectiveness of their policies and procedures and take appropriate measures to address any deficiencies.
           

        • B. Public Disclosures

          1. VASPs providing Exchange Services shall publish on their website in a prominent place or make available by other publicly accessible means—
           
            a. a detailed description of any actual or potential conflicts of interest arising out of their activities, and how these are managed;
            b. their policies and procedures relating to data privacy, whistleblowing and handling of client complaints;
            c. a summary containing the following information pertaining to each Virtual Asset offered for exchange by the VASP—
           
              i. name and symbol;
              ii. date of issuance;
              iii. market capitalisation and fully diluted value;
              iv. circulating supply, including as a percentage of maximum total supply [if applicable];
              v. whether the Virtual Asset has been subject to an independent smart contract audit and the date of the most recent audit; and
              vi. largest reduction in price from high to low stated as both an absolute amount and a percentage change, including when it occurred;
           
            d. details of how Virtual Assets traded over their trading venues are deposited and protected and how clients’ ownership in respect of those Virtual Assets are thereby respected; and
            e. a description of how the VASP determines the prices of the Virtual Assets it quotes to clients.
           
          2. Other disclosable matters. To the extent permissible under applicable laws, VASPs providing Exchange Services shall publish on their website or by other publicly accessible means—
           
            a. details of any past convictions or prosecutions of any member[s] of their Senior Management or Board, whether before the courts of the UAE or the courts of another jurisdiction; and
            b. any such other information relating to their business or activities as VARA may reasonably require.
           
          3. The disclosure requirements set out in this Rule II.B of this Exchange Services Rulebook are in addition to all disclosures required under the Market Conduct Rulebook and to all notifications to VARA required under the Compliance and Risk Management Rulebook.
           

      • Part III – Exchange Services Rules

        • A. Trading Venue Participants and Code of Conduct

          1. VASPs providing Exchange Services shall publish and enforce a code of conduct or other rules for all participants on their trading venue.
          2. The code of conduct required under Rule III.A.1 of this Exchange Services Rulebook should provide VASPs the rights and/or power to implement disciplinary actions against participants on their trading venue where they breach any Regulations, Rules or Directives.
          3. VASPs providing Exchange Services shall ensure that the code of conduct provides them the necessary rights and/or powers to issue, impose, require or collect, the following—
           
            a. warnings;
            b. reprimands;
            c. training;
            d. qualification minimums;
            e. remediation plans;
            f. compliance audits;
            g. restitution;
            h. contractually agreed penalties;
            i. conditions on trading;
            j. trading prohibitions;
            k. suspensions and restrictions to trading;
            l. expulsions;
            m. cancellation of a client’s orders and any outstanding instructions from that client;
            n. report any breaches to VARA; and
            o. criminal referrals.
           
          4. VARA shall have authority to pursue such additional remedies or disciplinary measures against participants of the trading venue of a VASP providing Exchange Services as it determines and may, in its sole and absolute discretion, delegate to a VASP providing Exchange Services the ability to enforce such additional remedies or disciplinary measures upon its written consent.
          5. In addition to the above, VARA may require the suspension of trading of any Virtual Asset with effect from such time as it may determine if there are reasonable grounds to suspect non-compliance with this Part III of this Exchange Services Rulebook. If VARA has required the suspension of trading of any Virtual Asset, it may impose such conditions on the procedure for lifting the suspension as it considers appropriate.
          6. VASPs providing Exchange Services shall ensure that—
           
            a. their code of conduct or other rules with respect to the conduct of their clients and trading venue participants are fairly disclosed to all relevant Entities; and
            b. clients provide valid acceptance to such rules in the Client Agreement in accordance with applicable laws.
           

        • B. Market Surveillance and Notifications to VARA

          1. VASPs providing Exchange Services shall share information for surveillance and disciplinary purposes with VARA, including establishing arrangements that allow the VASP to share information on large exposures in correlated markets.
          2. If a VASP suspects potential abuse affecting the market, the following information shall be provided to VARA, as applicable—
           
            a. details of a participant’s positions, in particular details of any large positions held, including on-exchange, related “over-the-counter” derivatives and physical market positions;
            b. Virtual Asset inventory levels;
            c. delivery mode and forms of service;
            d. action taken to implement position management powers;
            e. changes to position limits;
            f. additional Margin calls; and
            g. other action taken by the VASP.
           
          3. VASPs providing Exchange Services shall ensure that their fee structures are transparent, fair and non-discriminatory and that they do not create incentives to place, modify or cancel orders or to execute transactions in a way that disrupts the fair and orderly functioning of any market involving Virtual Assets.
           

        • C. Trading Systems Continuity

          1. In addition to all requirements in the Technology and Information Rulebook, VASPs providing Exchange Services shall have in place effective systems, procedures and arrangements to ensure that their trading systems—
           
            a. are resilient;
            b. have sufficient capacity to ensure orderly trading under conditions of high uncertainty and/or extreme volatility;
            c. are able to reject orders that exceed pre-determined volume and price thresholds or are clearly erroneous;
            d. are fully tested to ensure that conditions under Rules III.C.1.a-c of this Exchange Services Rulebook are met; and
            e. are subject to effective business continuity arrangements including, but not limited to, back-up and/or disaster recovery systems, facilities and sites, to ensure continuity of their services and reporting ability if there is any failure of the trading system.
           

        • D. Settlement

          1. VASPs providing Exchange Services shall complete the final settlement of a Virtual Asset transaction within twenty-four [24] hours of the transaction being executed on their trading venues, subject to any factors outside the VASP’s control, including but not limited to any limitations or malfunctioning of any DLT not controlled by the VASP or its Group.
           

      • Part IV – Margin Trading Rules

        • A. Compliance with Margin Trading Rules

          1. VASPs may only provide Margin Trading services if explicitly authorised to do so by VARA and such authorisation is expressly stipulated in their Licence.
          2. VASPs that are authorised to provide Margin Trading services, must comply with this Part IV of this Exchange Services Rulebook at all times when providing Margin Trading services.
          3. Margin Trading services may only be offered or provided to Qualified Investors and Institutional Investors.
          4. VASPs must not offer or provide Margin Trading services to a Retail Investor.
          5. VASPs must at all times ensure that they have sufficient Virtual Assets to provide Margin Trading services and can satisfy client obligations.
           

        • B. VARA Approval and Powers

          1. VARA may approve an application for the provision of Margin Trading services, provided that the VASP can demonstrate, to VARA’s satisfaction, compliance with the following requirements—
           
            a. the VASP has submitted for VARA’s approval details of the terms and conditions upon which it proposes to offer Margin Trading services to clients, including a copy of the template Margin Trading Agreement to be used by the VASP, together with information relating to the VASP’s financial condition and compliance with all Capital and Prudential Requirements applicable to the VASP;
            b. the VASP has established, and is able to demonstrate to VARA upon request, appropriate policies and procedures as well as systems and controls with regards to Margin Trading services, which shall include but not be limited to—
           
              i. the Margin which may be called, the applicable Margin rates and the method of calculating the Margin;
              ii. the acceptable methods of Margin payment and forms of collateral;
              iii. the circumstances under which a client or counterparty may be required to provide Margin and additional Margin, and the consequences of a failure to meet a Margin call, including the actions which the VASP may be entitled to take; and
              iv. applicable escalation procedures where a client or counterparty fails to meet Margin calls; and
           
            c. the VASP ensures, and is able to demonstrate to VARA upon request, that Virtual Assets collected as collateral for Initial Margin and Maintenance Margin purposes are liquid and can be liquidated within a reasonable timeframe.
           
          2. VARA may request to inspect the Margin Trading system of the VASP used to calculate clients’ Margin Trading positions and Margin and, prior to granting approval, request any other clarifications, information or documents it deems necessary.
          3. Notwithstanding a VASP having approval from VARA for the provision of Margin Trading, VARA shall have the power to instruct VASPs to take any of the following actions, in its sole and absolute discretion from time to time, and VASPs must comply with such instructions—
           
            a. suspend Margin Trading services for specified Virtual Assets or clients;
            b. close existing client positions; and
            c. increase Initial Margin and/or Maintenance Margin requirements.
           

        • C. Margin Trading Obligations

          1. Without prejudice to any other obligations, VASPs providing Margin Trading services shall—
           
            a. obtain information from each client prior to opening a Margin Trading Account to determine whether the Margin Trading service is suitable for a particular client, including but not limited to such information on the client’s financial position [including financial solvency], investment objectives, risk appetite, knowledge and experience in trading in Virtual Asset markets as may be relevant and practical;
            b. ensure that each client’s Margin Trading Account is segregated from all other trading accounts;
            c. only use all Virtual Assets and/or cash balance in the Margin Trading Account as collateral for Margin Trading in accordance with the terms of the Margin Trading Agreement;
            d. not to utilise the funds of any client to provide the facilities of Margin Trading to another client even if the client’s consent has been obtained by the VASP;
            e. ensure that each client has deposited the Initial Margin in the Margin Trading Account, in accordance with the agreed value, prior to the purchase of any Virtual Assets financed on Margin;
            f. ensure that, if a client has more than one [1] Margin Trading Account with the VASP, that all risk limits are monitored and maintained at the client level;
            g. provide each client with a written statement of account at least monthly showing the trading movement of the Virtual Assets financed on Margin and the percentage of their ownership in the Margin Trading Account relative to any Virtual Assets, cash or other assets held as Maintenance Margin;
            h. monitor on an ongoing basis the Margin Trading Account of each client and provide at least one [1] early warning notification to a client that the percentage of the client’s ownership in that account has fallen to a specified percentage and is at risk of falling below the required level of Maintenance Margin specified in the Margin Trading Agreement. The specified percentage at which such early warning notification must be given may be determined by the VASP acting in the best interests of its clients. Such notification must include a full re-statement of the risks required to be stated in the Margin Trading Agreement in Rule IV.E.1.d of this Exchange Services Rulebook below;
            i. in addition to Rule IV.C.1.h of this Exchange Services Rulebook above, monitor on an ongoing basis the Margin Trading Account of each client and notify the client promptly when the percentage of the client's ownership in that account falls below the required level of Maintenance Margin specified in the Margin Trading Agreement, so that they can cover the shortfall in the account, subject to Rule IV.C.1.j of this Exchange Services Rulebook below;
            j. in the event that the client is not themselves able to remedy the shortfall within a reasonable timeframe, sell all or some of the Virtual Assets available in the Margin Trading Account to the extent required to restore the client’s percentage of ownership to the Maintenance Margin [or such higher level as may be set out in the Margin Trading Agreement] as per the market value of such Virtual Assets on the date of sale;
            k. obtain the prior approval of VARA on any subsequent amendment to the Margin Trading system described in Rule IV.B.2 of this Exchange Services Rulebook above, and provide a technical report confirming that the amended system is able to fulfil the requirements of the Margin Trading service on an ongoing basis, including during times of high volatility; and
            l. ensure that orderly records are kept for the Margin Trading services undertaken for a period of at least eight [8] years.
           

        • D. Prudential Requirements, Initial Margin and Maintenance Margin

          1. VASPs authorised by VARA to provide Margin Trading services shall—
           
            a. ensure that the aggregate funds allocated for Margin Trading services by the VASP are included in the VASPs calculation of its Operational Exposure; and
            b. ensure that the amount of credit extended to a single client for Margin Trading does not exceed one tenth of the total funds directly or indirectly attributable to Margin Trading by the VASP in its Operational Exposure, in accordance with Rule IV.D.1.a of this Exchange Services Rulebook above.
           
          2. VASPs may only accept the following types of collateral in a Margin Trading Account—
           
            a. the Virtual Asset financed on Margin in that account;
            b. fiat currency; and
            c. Fiat-Referenced Virtual Asset referencing USD [or AED, as approved by VARA] and where such Fiat-Referenced Virtual Asset, in all events, is backed by cash or cash equivalent [as defined in internationally recognised accounting standards] reserves denominated in the fiat currency referenced of not less than the market value of the Fiat-Referenced Virtual Asset in public circulation, or not yet redeemed.
           
          3. Notwithstanding Rule IV.D.2 of this Exchange Services Rulebook, VASPs may accept the following types of collateral in a Margin Trading Account in the following circumstances—
           
            a. other Virtual Assets where there is a continuing fall in the market value of the Virtual Asset financed on Margin; and
            b. other Virtual Assets where trading in the Virtual Asset financed on Margin is suspended or discontinued for more than seven [7] Working Days or such other period prescribed by VARA.
           

        • E. Margin Trading Agreement

          1. The Margin Trading Agreement must include the following information—
           
            a. an explanation of the VASP’s responsibilities and the respective obligations of the VASP and the client including, but not limited to, termination rights, the effect of termination, applicable dispute resolution mechanisms and the VASP’s obligation to provide an early warning notification under Rule IV.C.1.h of this Exchange Services Rulebook including when such notifications will be provided;
            b. whether the client has the right to withdraw cash from the Margin Trading Account, transfer amounts from the Margin Trading Account to the other account, or use such funds for new Margin financing if these amounts are higher than the Maintenance Margin;
            c. how all financing is calculated, including but not limited to how and when it is paid or payable, the applicable rate, or in the case of a variable rate, how it is calculated and how it may vary and how such variations will be communicated by the VASP to the client;
            d. an explanation of the following risks the client may be exposed to when undertaking Margin Trading, including but not limited to—
           
              i. the risk that the client may lose all or part of the funds deposited in the Margin Trading Account;
              ii. the fact that the VASP may request that the client add Virtual Assets and/or funds in the Margin Trading Account if the Maintenance Margin falls below the prescribed levels or if the VASP increases Maintenance Margin requirements;
              iii. the right of the VASP to sell all or part of the Virtual Assets in the Margin Trading Account if the Maintenance Margin falls below the percentage specified in the Margin Trading Agreement; and
              iv. when and how the VASP may sell all or part of the Virtual Assets in the Margin Trading Account;
           
            e. express consent from the client that they understand, acknowledge and accept each of the risks listed in Rule IV.E.1.d of this Exchange Services Rulebook above;
            f. the applicable levels of Initial Margin and Maintenance Margin and circumstances in which Initial Margin and Maintenance Margin can be amended by the VASP;
            g. a breakdown of the commissions, charges and fees charged by the VASP relating to Margin Trading and when they are payable; and
            h. a confirmation of the client's right to pay the cash balance of the price of the remaining Virtual Assets in the Margin Trading Account at any time.
           
          2. VARA may require any amendments to the Margin Trading Agreement or other forms relating to Margin Trading conducted by a VASP as it deems appropriate.
           

      • Schedule 1–Definitions

        Term Definition
        “Board” has the meaning ascribed to it in the Company Rulebook.
        “Capital and Prudential Requirements” has the meaning ascribed to it in the Company Rulebook.
        “Client Agreements” has the meaning ascribed to it in the Market Conduct Rulebook.
        “Company Rulebook” means the Company Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “Compliance and Risk Management Rulebook” means the Compliance and Risk Management Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “Directive” has the meaning ascribed to it in the Regulations.
        “Distributed Ledger Technology” or “DLT” has the meaning ascribed to the term “Distributed Ledger Technology” in the Dubai VA Law.
        “Dubai VA Law” means Law No. [4] of 2022 Regulating Virtual Assets in the Emirate of Dubai, as may be amended from time to time.
        “Emirate” means all zones across the Emirate of Dubai, including Special Development Zones and Free Zones but excluding the Dubai International Financial Centre.
        “Entity” means any legal entity or individual.
        “Exchange Services” has the meaning ascribed to it in Schedule 1 of the Regulations.
        “Exchange Services Rulebook” means this Exchange Services Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “Fiat-Referenced Virtual Asset”
        means a type of Virtual Asset that purports to maintain a stable value in relation to the value of one or more fiat currencies, can be digitally traded and functions as—
        [a] a medium of exchange;
        [b] a unit of account; and/or
        [c] a store of value,
        but does not have legal tender status in any jurisdiction. A Fiat-Referenced Virtual Asset is neither issued nor guaranteed by any jurisdiction, and fulfils the above functions only by agreement within the community of users of the Fiat-Referenced Virtual Asset.
        “Group” has the meaning ascribed to it in the Company Rulebook.
        “Initial Margin”
        means the amount deposited by the client in the Margin Trading Account which shall be at least the greater of—
        [a] the Maintenance Margin; or
        [b] such greater amount as VARA may from time to time require for a specific VASP or Virtual Asset.
        “Institutional Investor” has the meaning ascribed to it in the Market Conduct Rulebook.
        “Licence” has the meaning ascribed to it in the Regulations.
        “Licensed” means holding a valid Licence.
        “Maintenance Margin” means the margin that must be maintained in all Margin Trading Accounts which shall not be less than thirty percent [30%] of the VA’s market value in the Margin Trading Account at any time after the purchase date, or such greater amount as VARA may from time to time require for a specific VASP or Virtual Asset.
        “Margin” means any Initial Margin or Maintenance Margin provided by a client in support of Margin Trading services.
        “Margin Trading” means the financing made by a VASP of a proportion or multiple of the market value of the Virtual Assets financed on margin, and secured as collateral by the Virtual Assets available in the Margin Trading Account or any other collateral in the cases exclusively stated in these Rules.
        “Margin Trading Account” means a type of client account with the VASP, through which dealings in Virtual Assets financed on Margin are executed.
        “Margin Trading Agreement” means the agreement between the VASP and the client specifying the terms and conditions governing the relationship between them in relation to Margin Trading.
        “Market Conduct Rulebook” means the Market Conduct Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “Market Offences” has the meaning ascribed to it in the Regulations.
        “Operational Exposure” has the meaning ascribed to it in the Regulations.
        “Paid-Up Capital” has the meaning ascribed to it in the Company Rulebook.
        “Qualified Investor” has the meaning ascribed to it in the Market Conduct Rulebook.
        “Regulations” means the Virtual Assets and Related Activities Regulations 2023, as may be amended from time to time.
        “Retail Investor” has the meaning ascribed to it in the Market Conduct Rulebook.
        “Rule” has the meaning ascribed to it in the Regulations.
        “Rulebook” has the meaning ascribed to it in the Regulations.
        “Senior Management” has the meaning ascribed to it in the Company Rulebook.
        “Technology and Information Rulebook” means the Technology and Information Rulebook issued by VARA pursuant to the Regulations, as may be amended VARA from time to time.
        “UAE” means the United Arab Emirates.
        “VA Activity” means the activities listed in Schedule 1 of the Regulations, as may be amended from time to time.
        “VARA” means the Dubai Virtual Assets Regulatory Authority.
        “VASP” means an Entity authorised by VARA to conduct VA Activity[ies] in the Emirate.
        “Virtual Asset” or “VA” has the meaning ascribed to it in the Dubai VA Law.
        “Working Day” has the meaning ascribed to it in the Regulations.

         

    • Lending and Borrowing Services Rulebook

      • Introduction

        The Dubai Virtual Assets Regulatory Authority [VARA] was established and authorised by Law No. [4] of 2022 Regulating Virtual Assets in the Emirate of Dubai [Dubai VA Law] to regulate Virtual Asset Service Providers [VASPs].
         
        This Lending and Borrowing Services Rulebook is issued pursuant to, and forms part of, the Virtual Assets and Related Activities Regulations 2023 [the Regulations] issued by VARA and applies to all VASPs Licensed by VARA to carry out Lending and Borrowing Services in the Emirate.
         
        This Lending and Borrowing Services Rulebook applies in addition to all other requirements in the Regulations as may be in force from time to time. As such, VASPs Licensed by VARA to carry out Lending and Borrowing Services must also comply with the following Rulebooks applicable to all VASPs:
         
          1. Company Rulebook;
          2. Compliance and Risk Management Rulebook;
          3. Technology and Information Rulebook;
          4. Market Conduct Rulebook; and
          5. All Rulebooks specific to the VA Activities that a VASP is Licensed by VARA to carry out.
         
        Where a VASP is Licensed by VARA to carry out other VA Activities in the Emirate in addition to Lending and Borrowing Services, it must comply with all Rulebooks which apply to those other VA Activities. Unless otherwise stated, the Rules in VA Activity specific Rulebooks apply cumulatively for each VA Activity a VASP carries out.
         
        Capitalised terms in this Lending and Borrowing Services Rulebook have the meanings ascribed to them in the Regulations or as otherwise provided in Schedule 1.
         

      • Part I – Policies, Procedures and Public Disclosures

        • A. Policies and Procedures

          1. In addition to all other requirements in the Regulations and Rulebooks, VASPs providing Lending and Borrowing Services shall establish, implement and enforce appropriate written internal policies and procedures relating to the following—
           
            a. the ability of clients to have access to and withdraw their Virtual Assets including, but not limited to, during periods of high uncertainty and/or extreme volatility; and
            b. such other policies and procedures as VARA may require from time to time.
           
          2. VASPs providing Lending and Borrowing Services shall assess and, in any case, at least yearly review the effectiveness of their policies and procedures and take appropriate measures to address any deficiencies.
           

        • B. Public Disclosures

          1. VASPs providing Lending and Borrowing Services shall publish on their website in a prominent place or make available by other publicly accessible means—
           
            a. a detailed description of any actual or potential conflicts of interest arising out of their activities, and how these are managed;
            b. their policies and procedures relating to data privacy, whistleblowing and handling of client complaints;
            c. a statement as to the ability of clients to have access to and withdraw their Virtual Assets, particularly in times of extreme volatility;
            d. a statement as to the VASP’s arrangements for the protection of clients’ assets held by the VASP and how it determines uses of client Virtual Assets, including but not limited to a detailed description of such uses;
            e. a statement as to how they protect client Virtual Assets from counterparty risk, including but not limited to whether the VASP only enters into over-collateralised loans;
            f. a statement as to how in the course of the provision of Lending and Borrowing Services, client Virtual Assets are used and how clients’ interests in respect of those Virtual Assets are thereby respected;
            g. a statement explaining that client Virtual Assets used by the VASP in the course of the provision of Lending and Borrowing Services may be at risk, including the types and nature of such risks, and a statement on the likelihood and severity of any losses which may be suffered; and
            h. a statement as to how liquidity risk is managed.
           
          2. Other disclosable matters. To the extent permissible under applicable laws, VASPs providing Lending and Borrowing Services shall publish on their website or by other publicly accessible means—
           
            a. details of any past convictions or prosecutions of any member[s] of their Senior Management or Board, whether before the courts of the UAE or the courts of another jurisdiction; and
            b. any such other information relating to their business or activities as VARA may reasonably require.
           
          3. The disclosure requirements set out in this Rule I.B of this Lending and Borrowing Services Rulebook are in addition to all disclosures required under the Market Conduct Rulebook and to all notifications to VARA required under the Compliance and Risk Management Rulebook.
           

        • C. Activity-Specific Disclosures

          1. Interest payments to clients. VASPs providing Lending and Borrowing Services shall, at a minimum, clearly disclose the following in relation to Virtual Assets they borrow from clients—
           
            a. the denomination of interest payments [e.g. the type of Virtual Assets] and whether the client has an option to select such denomination and modify the selection at any time;
            b. the amount and nature [e.g. whether it is a fixed rate or a variable rate] of interest offered to clients in the form of annual percentage yield denominated in the type of borrowed Virtual Asset;
            c. whether the amount of interest disclosed in Rule I.C.1 of this Lending and Borrowing Services Rulebook is an estimation and if so, provide a description of how such estimation is made by the VASP;
            d. the frequency at which interest accrues and is credited to client accounts; and
            e. whether interest is accrued on a simple or compound basis and, if the VASP adopts a tiered approach which offers compound interest for a maximum value of Virtual Assets, the details of such tiered approach.
           

        • D. Other Disclosures

          1. Lending and Borrowing Services explanation. VASPs shall publish a prominent explanation of—
           
            a. their Lending and Borrowing Services;
            b. specification of which Lending and Borrowing Services are available to which client types; and
            c. any licensing and regulatory restrictions on Lending and Borrowing Services available to different client types.
           
          2. Lending and borrowing asset and liability report. VASPs shall publish and update at least every three [3] months a lending and borrowing asset and liability report, including but not limited to values of Virtual Assets held, lent or borrowed, pledged or posted as collateral, and how they are held.
          3. Governance controls. VASPs providing Lending and Borrowing Services shall publish a clear and transparent explanation of all governance arrangements in respect of—
           
            a. protocol governance structures to the extent relevant and applicable to the provision of Lending and Borrowing Services and the loaning and pledging of Virtual Assets to and by clients, as applicable, including client risks in respect of the same; and
            b. whether or not the VASP uses any proprietary protocols in the course of the provision of the Lending and Borrowing Services.
           
          4. Third parties. To the extent that a VASP’s Lending and Borrowing Services are made available through, or information communicated via, a third party, the VASP shall also procure that all disclosures and information required by this Part I of this Lending and Borrowing Services Rulebook is provided in an easily accessible location on the website of that third party, in plain and transparent language, in a machine-readable format and is kept accurate and up-to-date at all times.
           

      • Part II – Lending and Borrowing Services Rules

        • A. General Requirements

          1. Liquidity. VASPs providing Lending and Borrowing Services shall, at all times, ensure that—
           
            a. they have sufficient Virtual Assets to provide services and satisfy client obligations; and
            b. sufficient collateral has been posted by borrowers in accordance with agreed amounts,
            and that both are monitored and audited on a regular basis.
           
          2. VASPs providing Lending and Borrowing Services shall notify VARA immediately if the requirements in Rule II.A.1 of this Lending and Borrowing Services Rulebook are not met, or may not be materially met in the foreseeable future.
          3. Withdrawals. VASPs providing Lending and Borrowing Services shall ensure all clients are fully aware when Virtual Assets are not able to be withdrawn as part of the Lending and Borrowing Services they provide. To the extent Virtual Assets are able to be withdrawn, VASPs shall ensure all clients can withdraw such Virtual Assets at all times, and complete withdrawal requests so that Virtual Assets which are the subject of such requests are transferred in accordance with client instructions within twenty-four [24] hours, subject to any factors outside of the VASP’s control including limitations or malfunctioning of any DLT not controlled by the VASP or its Group.
          4. Collateral. All Virtual Assets held by a VASP providing Lending and Borrowing Services may only be used in accordance with the terms of its Lending and Borrowing Services which, in addition to the requirements in Rule II.E of this Lending and Borrowing Services Rulebook, shall be clearly set out in its Client Agreements. VASPs providing Lending and Borrowing Services shall ensure that they have adequate governance frameworks, policies, systems and controls in place to manage how collateral is held and that it is used responsibly, including in line with Client Agreements at all times.
          5. Virtual Assets of a client used by a VASP in the course of, or in connection with, the provision of any Lending and Borrowing Services shall be held on behalf of the client unless the Client Agreement expressly states otherwise.
          6. Counterparty due diligence. VASPs providing Lending and Borrowing Services shall, on a regular basis, conduct comprehensive due diligence on all clients and counterparties such that they are satisfied that client Virtual Assets are not subject to undue counterparty risk. In particular, VASPs shall collect and verify the following information of each counterparty—
           
            a. the purpose[s] of loans;
            b. the nature and type of business;
            c. financial situation and overall liquidity; and
            d. all other information which a prudent lender would require to assess risk associated with a particular loan.
           

        • B. Client Reporting & Valuation

          1. VASPs providing Lending and Borrowing Services shall, at least monthly, provide to clients a written statement containing the following information—
           
            a. the total value of Virtual Assets in a client’s account;
            b. all lending and borrowing transactions entered into between the VASP and the client in the reporting period;
            c. the amount of interest accrued from and credited to the client’s account for lending transactions [both total and during the reporting period]; and
            d. the amount of collateral posted by the client for borrowing transactions in the reporting period [both total and during the reporting period].
           
          2. VASPs shall maintain accurate and reliable records that are sufficient to confirm and identify assets under management and client positions.
          3. VASPs providing Lending and Borrowing Services shall ensure that all assets under management are subject to independent valuation and client reporting.
          4. VASPs shall have comprehensive and well documented valuation policies and procedures in place to ensure the production of timely and accurate valuations in accordance with Rule II.B.1 of this Lending and Borrowing Services Rulebook.
           

        • C. Additional Record-Keeping Requirements

          1. VASPs providing Lending and Borrowing Services shall maintain the following for at least eight [8] years—
           
            a. records of all transactions in relation to their Lending and Borrowing Services, including but not limited to all Client Agreements, agreements with other counterparties and client instructions; and
            b. information collected from counterparties in accordance with Rule II.A.6 of this Lending and Borrowing Services Rulebook.
           
          2. All records maintained in accordance with Rule II.C.1 of this Lending and Borrowing Services Rulebook must be immediately provided for VARA inspection upon request.
           

        • D. Risk Management and Due Diligence

          1. Before providing any Lending and Borrowing Services to a client, a VASP shall carry out sufficient due diligence to satisfy itself as to the risk profile of such client and transaction at that time and during the course of the Lending and Borrowing Services, the need for and the suitability of any collateral to be provided, and that any collateral is capable of being pledged including under applicable law.
          2. Before providing any Lending and Borrowing Services on behalf of a third party, VASPs shall ensure that sufficient steps are taken on behalf of such third party to meet the requirements set out in Rule II.D.1 of this Lending and Borrowing Services Rulebook.
          3. VASPs shall ensure that liquidity risk and market risk are each monitored and tested regularly, and appropriate measures put in place as required to address any such risk in a prompt manner.
          4. VASPs shall ensure that, to the extent that collateral, including Virtual Assets, is held by them, such collateral is adequate and appropriately protects the VASP against applicable risks. VASPs shall monitor any such risk and record the assessment of such risk regularly and on an ongoing basis. VASPs shall put appropriate measures in place as required to address any such risk in a prompt manner.
          5. All such risk management and due diligence must be regularly audited by an independent third party.
           

        • E. Client Agreements

          1. In addition to all requirements in the Market Conduct Rulebook, Client Agreements for Lending and Borrowing Services shall set out the following, to the extent applicable—
           
            a. descriptions of the Virtual Assets lent, borrowed, and/or used as collateral that are sufficient to identify such Virtual Assets;
            b. any loan-to-value ratio[s] applicable under the Client Agreement;
            c. the respective rights of the VASP, the client and any other Entity involved in the Lending and Borrowing Services in respect of Virtual Assets that are the subject of the Client Agreement, including in respect of collateral;
            d. how and when any interest is paid or payable, the applicable rate, or in the case of a variable rate, how it is calculated and how interest may vary and how such variations will be communicated by the VASP to the client;
            e. how and when any Virtual Assets lent or borrowed, or held as collateral, are to be held and returned;
            f. whether or not Virtual Assets of a client used by a VASP in the course of, or in connection with, carrying out any Lending and Borrowing Services, shall be held on behalf of the client;
            g. the consent of the clients to the use of any Virtual Assets of the client in the course of the provision of Lending and Borrowing Services by the VASP shall be clearly and transparently obtained in accordance with all applicable laws;
            h. any right of the client to withdraw any Virtual Assets lent or borrowed or held as collateral;
            i. a statement explaining that client Virtual Assets used by the VASP in the course of the provision of Lending and Borrowing Services may be at risk, including the types and nature of such risks, and a statement on the likelihood and severity of any losses which may be suffered;
            j. any rights of the VASP to vary the terms of the Client Agreement;
            k. any rights of the VASP and the client to terminate the Client Agreement and the consequences of termination;
            l. any terms relating to any fluctuation in value of the Virtual Assets to which the Client Agreement relates;
            m. consequences of any event of default;
            n. an explanation of the risks the client may be exposed to;
            o. full details of the VASP’s client complaints procedure to enable clients to register complaints as required in relation to the VASP or the services provided by the VASP; and
            p. any requirements necessary for compliance with the governing law of the Client Agreement.
           

      • Schedule 1 – Definitions

        Term Definition
        “Board” has the meaning ascribed to it in the Company Rulebook.
        “Client Agreements” has the meaning ascribed to it in the Market Conduct Rulebook.
        “Company Rulebook” means the Company Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “Compliance and Risk Management Rulebook” means the Compliance and Risk Management Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “Distributed Ledger Technology” or “DLT” has the meaning ascribed to the term “Distributed Ledger Technology” in the Dubai VA Law.
        “Dubai VA Law” means Law No. [4] of 2022 Regulating Virtual Assets in the Emirate of Dubai, as may be amended from time to time.
        “Emirate” means all zones across the Emirate of Dubai, including Special Development Zones and Free Zones but excluding the Dubai International Financial Centre.
        “Entity” means any legal entity or individual.
        “Licence” has the meaning ascribed to it in the Regulations.
        “Licensed” means having a valid Licence.
        “Lending and Borrowing Services” has the meaning ascribed to it in Schedule 1 of the Regulations.
        “Lending and Borrowing Services Rulebook” means this Lending and Borrowing Services Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “Market Conduct Rulebook” means the Market Conduct Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
        “Regulations” means the Virtual Assets and Related Activities Regulations 2023, as may be amended from time to time.
        “Rule” has the meaning ascribed to it in the Regulations.
        “Rulebook” has the meaning ascribed to it in the Regulations.
        “Senior Management” has the meaning ascribed to it in the Company Rulebook.
        “UAE” means the United Arab Emirates.
        “VA Activity” means the activities listed in Schedule 1 of the Regulations, as may be amended from time to time.
        “VARA” means the Dubai Virtual Assets Regulatory Authority.
        “VASP” means an Entity authorised by VARA to conduct VA Activity[ies] in the Emirate.
        “Virtual Asset” or “VA” has the meaning ascribed to it in the Dubai VA Law.

         

    • VA Management and Investment Services Rulebook

      • VA Transfer and Settlement Services Rulebook

        • Introduction

          The Dubai Virtual Assets Regulatory Authority [VARA] was established and authorised by Law No. [4] of 2022 Regulating Virtual Assets in the Emirate of Dubai [Dubai VA Law] to regulate Virtual Asset Service Providers [VASPs].
           
          This VA Management and Investment Services Rulebook is issued pursuant to, and forms part of, the Virtual Assets and Related Activities Regulations 2023 [the Regulations] issued by VARA and applies to all VASPs Licensed by VARA to carry out VA Management and Investment Services in the Emirate.
           
          This VA Management and Investment Services Rulebook applies in addition to all other requirements in the Regulations as may be in force from time to time. As such, VASPs Licensed by VARA to carry out VA Management and Investment Services must also comply with the following Rulebooks applicable to all VASPs:
           
            1. Company Rulebook;
            2. Compliance and Risk Management Rulebook;
            3. Technology and Information Rulebook;
            4. Market Conduct Rulebook; and
            5. All Rulebooks specific to the VA Activities that a VASP is Licensed by VARA to carry out.
           
          Where a VASP is Licensed by VARA to carry out other VA Activities in the Emirate in addition to VA Management and Investment Services, it must comply with all Rulebooks which apply to those other VA Activities. Unless otherwise stated, the Rules in VA Activity specific Rulebooks apply cumulatively for each VA Activity a VASP carries out.
           
          Capitalised terms in this VA Management and Investment Services Rulebook have the meanings ascribed to them in the Regulations or as otherwise provided in Schedule 1.
           

          • Introduction

            The Dubai Virtual Assets Regulatory Authority [VARA] was established and authorised by Law No. [4] of 2022 Regulating Virtual Assets in the Emirate of Dubai [Dubai VA Law] to regulate Virtual Asset Service Providers [VASPs], including to issue authorisations to conduct regulated Virtual Asset Activities [VA Activities].
             
            This VA Transfer and Settlement Services Rulebook is issued pursuant to, and forms part of, the Virtual Assets and Related Activities Regulations 2023 [the Regulations] issued by VARA, and applies to all VASPs Licensed by VARA to carry out VA Transfer and Settlement Services in and/or from the Emirate.
             
            This VA Transfer and Settlement Services Rulebook applies in addition to all other requirements in the Regulations as may be in force from time to time. As such, VASPs Licensed by VARA to carry out VA Transfer and Settlement Services must also comply with the following Rulebooks applicable to all VASPs:
             
              1.
                         		 Company Rulebook;
             
              2.
                         		 Compliance and Risk Management Rulebook;
             
              3.
                         		 Technology and Information Rulebook;
             
              4.
                         		 Market Conduct Rulebook; and
             
              5.
                         		 All Rulebooks specific to the VA Activities that a VASP is Licensed by VARA to carry out.
             
            Where a VASP is Licensed by VARA to carry out other VA Activities in the Emirate, in addition to VA Transfer and Settlement Services, it must comply with all Rulebooks that apply to those other VA Activities. Unless otherwise stated, the Rules in VA Activity specific Rulebooks apply cumulatively for each VA Activity a VASP carries out.
             
            Capitalised terms in this VA Transfer and Settlement Services Rulebook have the meanings ascribed to them in the Regulations or as otherwise provided in Schedule 1.

          • Part I – Policies, Procedures and Public Disclosures

            • Part I – Policies, Procedures and Public Disclosures

              • A. Policies and Procedures

                1. In addition to all other requirements in the Regulations and Rulebooks, VASPs providing VA Management and Investment Services shall establish, implement and enforce appropriate written internal policies and procedures relating to the following—
                 
                  a. the ability of clients to have access to and withdraw their Virtual Assets including, but not limited to, during periods of high uncertainty and/or extreme volatility;
                  b. their assessment of client suitability for relevant products or services, including but not limited to the nature, features, costs and risks of investment services, Virtual Assets or other financial instruments selected for their clients, while taking into account cost and complexity;
                  c. how they ensure all Staff providing VA Management and Investment Services to clients are sufficiently competent in accordance with Rule II.B.1 of this VA Management and Investment Services Rulebook; and
                  d. such other policies and procedures as VARA may require from time to time.
                 
                2. VASPs providing VA Management and Investment Services shall assess and, in any case, at least yearly review the effectiveness of their policies and procedures and take appropriate measures to address any deficiencies.
                 

                • A Policies and Procedures

                  1.
                                     		 In addition to all other requirements in the Regulations and Rulebooks, VASPs providing VA Transfer and Settlement Services shall establish, implement and enforce appropriate written internal policies and procedures relating to the following—
                   
                    a.
                                     		 how they will rectify any non-executed, defectively executed or incomplete Virtual Assets transmission or transfer, and/or settlement in the course of providing VA Transfer and Settlement Services, including but not limited to refunding affected clients; and
                    b.
                                     		 such other policies or procedures as VARA may require from time to time.
                   
                  2.
                                     		 VASPs providing VA Transfer and Settlement Services shall assess and, in any case at least yearly, review the effectiveness of their policies and procedures and take appropriate measures to address any deficiencies.
                   

                • B. Public Disclosures

                  1. VASPs providing VA Management and Investment Services shall publish on their website in a prominent place or make available by other publicly accessible means—
                   
                    a. a detailed description of any actual or potential conflicts of interest arising out of their activities, and how these are managed;
                    b. their policies and procedures relating to data privacy, whistleblowing and handling of client complaints;
                    c. a statement as to the ability of clients to have access to and withdraw their Virtual Assets, particularly in times of extreme volatility;
                    d. a statement as to the VASP’s arrangements for the protection of clients’ assets held by the VASP and how it determines uses of client Virtual Assets including but not limited to a detailed description of such uses;
                    e. a statement as to how they protect client Virtual Assets from counterparty risk;
                    f. a statement as to how in the course of the provision on VA Management and Investment Services, client Virtual Assets are used and how clients’ interests in respect of those Virtual Assets are thereby respected;
                    g. a statement explaining that client Virtual Assets used by the VASP in the course of the provision of VA Management and Investment Services may be at risk, including the types and nature of such risks, and a statement on the likelihood and severity of any losses which may be suffered;
                    h. a statement in relation to order execution by the VASP;
                    i. a statement as to how liquidity risk is managed; and
                    j. such other information as VARA may require from time to time.
                   
                  2. Other disclosable matters. To the extent permissible under applicable laws, VASPs providing VA Management and Investment Services shall publish on their website or by other publicly accessible means—
                   
                    a. details of any past convictions or prosecutions of any member[s] of their Senior Management or Board, whether before the courts of the UAE or the courts of another jurisdiction; and
                    b. any such other information relating to their business or activities as VARA may reasonably require.
                   
                  3. The disclosure requirements set out in this Rule I.B of this VA Management and Investment Services Rulebook are in addition to all disclosures required under the Market Conduct Rulebook and to all notifications to VARA required under the Compliance and Risk Management Rulebook.
                   

                  • B Public Disclosures

                    1.
                                         		 VASPs providing VA Transfer and Settlement Services shall publish on their website in a prominent place or make available by other publicly accessible means—
                     
                      a.
                                         		 a detailed description of any actual or potential conflicts of interest arising out of their activities , and how these are managed;
                      b.
                                         		 their policies and procedures relating to data privacy, whistleblowing and handling of client complaints;
                      c.
                                         		 a statement of whether the VASP refers or introduces clients to other Entities including, but not limited to, other VASPs and, if so, a description of the terms of such arrangements and the monetary or non-monetary benefits received by the VASP, including by way of reciprocation for any service or business; and
                      d.
                                         		 a statement of whether the VASP has accounts, funds or Virtual Assets maintained by a third party and if so, provide the identity of that third party.
                     
                    2.
                                         		 Other disclosable matters. To the extent permissible under applicable laws, VASPs providing VA Transfer and Settlement Services shall publish on their website, or by other publicly accessible means—
                     
                      a.
                                         		 details of any past convictions or prosecutions of any member[s] of their Senior Management or Board, whether before the courts of the UAE or the courts of another jurisdiction; and
                      b.
                                         		 any such other information relating to their business or activities as VARA may reasonably require.
                     
                    3.
                                         		 The disclosure requirements set out in this Rule I.B of this VA Transfer and Settlement Services Rulebook are in addition to all disclosures required under the Market Conduct Rulebook, and to all notifications to VARA required under the Compliance and Risk Management Rulebook.
                     

            • Part II – VA Management and Investment Services Rules

              • Part II – VA Transfer and Settlement Rules

                • A. Client Suitability

                  1. VASPs providing VA Management and Investment Services shall only provide such services regarding Virtual Assets to clients for which they are suitable.
                  2. Where VASPs provide VA Management and Investment Services which include a personal recommendation to a client, they shall consider the following factors at a minimum in respect of that client—
                   
                    a. knowledge and experience in investing in Virtual Assets;
                    b. investment objectives, including but not limited to risk tolerance, time horizon and venues through which they can acquire Virtual Assets; and
                    c. financial circumstances including, but not limited to, their ability to bear sudden and significant losses or the proportion of their net worth which is invested in Virtual Assets.
                   
                  3. VASPs providing VA Management and Investment Services shall collect all necessary information from clients for the purpose of assessing relevant factors in accordance with Rule II.A.1 and Rule II.A.2 of this VA Management and Investment Services Rulebook, depending on the nature of the service and take all reasonable steps to ensure such information is accurate and up-to-date. All such information shall be maintained for at least eight [8] years.
                  4. To the extent Rule II.A.2 of this VA Management and Investment Services Rulebook is applicable, VASPs shall specify how the services are appropriate for a client by reference to the factors assessed by the VASP in accordance with Rule II.A.2 of this VA Management and Investment Services Rulebook.
                   

                  • A General Requirements

                    1.
                                         		 VASPs providing VA Transfer and Settlement Services must comply with the provisions set forth in this Part II of this VA Transfer and Settlement Services Rulebook.
                    2.
                                         		 In addition to the Rules in this Part II of this VA Transfer and Settlement Services Rulebook, VASPs providing VA Transfer and Settlement Services must also comply with all applicable legal and regulatory requirements issued by the CBUAE which apply to the VASP, including but not limited to all such applicable legal and regulatory requirements, which pertain to the end-to-end enablement of payments, remittances and/or other related services as may be amended from time to time.
                    3.
                                         		 In addition to the Rules in this Part II of this VA Transfer and Settlement Services Rulebook, VASPs providing VA Transfer and Settlement Services must ensure that they comply with all legal and regulatory requirements for such services, inside and outside of the UAE. VASPs must ensure at all times that any transmission or transfer, and/or settlement being undertaken is permissible and can be facilitated through, and concluded in, all jurisdictions that are relevant to that transmission or transfer, and/or settlement.
                    4.
                                         		 In addition to all other requirements in the Compliance and Risk Management Rulebook, VASPs providing VA Transfer and Settlement Services must comply with all requirements with respect to AML/CFT contained in that Rulebook, including but not limited to FATF-specific compliance requirements such as the Travel Rule.
                     

                  • B. Staff Competency

                    1. In addition to all requirements in the Company Rulebook, VASPs providing VA Management and Investment Services shall ensure all of their Staff are knowledgeable, competent and suitably trained given the nature of their role. In assessing Staff competency, VASPs shall consider the following factors at a minimum in the context of the role of the Staff member concerned—
                     
                      a. academic, professional and industry qualifications;
                      b. experience in the Virtual Assets sector, including but not limited to hands-on working experience acquired through their employment by Entities carrying out activities similar to VA Activities outside of the Emirate;
                      c. whether they have a good understanding of the VARA regulatory framework, including but not limited to the Regulations, Rules and Directives governing the provision of VA Management and Investment Services; and
                      d. industry standards as may be applicable to the Virtual Assets sector from time to time.
                     

                    • B Property Interests and Protection of Client Virtual Assets

                      1.
                                             		 VASPs providing VA Transfer and Settlement Services are prohibited from selling, transferring, assigning, lending, rehypothecating, pledging, converting into another Virtual Asset, or otherwise using or encumbering any Virtual Assets for the purposes of a transmission or transfer, and/or settlement, or authorising or permitting the same, except when authorised by explicit consent from their client to do so, as part of the VA Transfer and Settlement Services being provided to that client.
                      2.
                                             		 The consent required under Rule II.B.1 of this VA Transfer and Settlement Services Rulebook must be secured through explicit instruction from, or acceptance by the client prior to the VASP carrying out any VA Transfer and Settlement Services for that client, but is not required on a per transmission or transfer, and/or settlement basis, unless explicitly required by the client, insofar as the said transmission or transfer, and/or settlement meets the conditions consented to by the client.
                       

                    • C. Verification of Information

                      1. VASPs providing VA Management and Investment Services shall not provide statements, promises, forecasts or other types of information which they know or suspect to be misleading, false or deceptive or which they should have reasonably known to be misleading, false or deceptive at the time of making such statement, promise or forecast.
                      2. Prior to making any statement, promise or forecast, VASPs providing VA Management and Investment Services shall verify factual information against appropriate and reliable source materials and shall use all reasonable endeavours to verify the continued accuracy of such information.
                       

                      • C Authorisation and Responsibility for Transmissions or Transfers, and/or Settlements

                        1.
                                                 		 VASPs must have procedures for ensuring that all VA Transfer and Settlement Services carried out for a client are authorised by the relevant client, and that the VASP is acting in accordance with the client’s instructions at all times.
                        2.
                                                 		 To the extent that any Virtual Assets transmission or transfer, and/or settlement processed by a VASP as part of any VA Transfer and Settlement Services is not authorised by the relevant client, or is not carried out by the VASP in accordance with the client’s instructions due to any reason whether or not it is a VASP triggered consequence, the VASP—
                         
                          a.
                                                 		 shall, as soon as practicable but in all events within twenty-four [24] hours of becoming aware of such erroneous execution, refund the client or otherwise restore the client’s account to the state it would have been in, had the wrongful transmission or transfer, and/or settlement not been effected; and
                          b.
                                                 		 is liable to the client in respect of the loss suffered by the client as a direct result of the VASP’s actions or omissions.
                         
                        3.
                                                 		 Where a VASP’s client is the sender of a Virtual Assets transmission or transfer, and/or settlement the VASP is liable to its client for the correct transmission or transfer, and/or settlement of the Virtual Assets to the recipient, whether the transmission or transfer, and/or settlement is to the recipient’s VASP [if applicable] or VA Wallet. To the extent that any such Virtual Assets transmission or transfer, and/or settlement is not received by the target recipient, the VASP must make immediate efforts to trace the Virtual Assets, establish the cause of the failure, and notify its client [the sender] of the outcome. The VASP shall only be deemed to have fulfilled its responsibility if and when it is able to prove that it is not liable in respect of a non-executed, defectively executed or incomplete Virtual Assets transmission or transfer, and/or settlement.
                        4.
                                                 		 A recipient’s VASP [if applicable] is responsible for the systemic readiness and infrastructural functioning of VA Wallets and/or accounts of its clients for the purposes of receiving Virtual Assets, as well as providing all routing information that is necessary for a transmission or transfer, and/or settlement to be completed when requested by the sender’s VASP. To the extent that any Virtual Assets transmission or transfer, and/or settlement is not received by the target recipient, the recipient VASP shall only be liable if and when the sender’s VASP can establish that it has executed the transmission or transfer, and/or settlement in accordance with the instructions, and that the error was caused by the recipient’s VASP.
                        5.
                                                 		 VASPs must maintain records of all client instructions for a period of eight [8] years.
                         

                      • D. Impermissible Activities

                        1. VASPs shall not authorise or permit rehypothecation of Virtual Assets for which they provide VA Management and Investment Services unless they have explicit prior consent from the client to do so.
                        2. VASPs providing VA Management and Investment Services shall only use or exercise authority relating to a Virtual Asset based on valid authorisation and/or specific instructions from the client.
                        3. Virtual Assets of a client used by a VASP in the course of, or in connection with, the provision of any VA Management and Investment Services shall be held on behalf of the client unless the Client Agreement expressly states otherwise.
                         

                        • D Client Disclosures

                          1.
                                                     		 In addition to all requirements in the Market Conduct Rulebook, prior to entering into any Client Agreements to provide VA Transfer and Settlement Services, VASPs must disclose to clients and potential clients all material risks associated with using Virtual Assets in connection with VA Transfer and Settlement Services, including but not limited to—
                           
                            a.
                                                     		 Virtual Assets transactions may be irreversible, meaning that any losses suffered because of fraud or an accidental or unauthorised transaction may not be recoverable;
                            b.
                                                     		 Virtual Assets transactions may not be finalised until recorded on the relevant DLT for the Virtual Asset, which may not be the time or date that the client initiates the transmission or transfer, and/or settlement; and
                            c.
                                                     		 Virtual Assets may experience technical difficulties unrelated to actions by the VASP that may in turn impact the client’s ability to access or use the Virtual Assets for transmissions or transfers, and/or settlements.
                           
                          2.
                                                     		 In addition to all requirements in the Market Conduct Rulebook, prior to entering into any Client Agreements to provide VA Transfer and Settlement Services, VASPs must disclose all the relevant terms and conditions associated with the VA Transfer and Settlement Services, including, as applicable, the following—
                           
                            a.
                                                     		 a fee schedule listing—
                           
                              i. all fees and charges and how they will be paid;
                              ii. how the fees and charges are calculated, if they are not set in advance; and
                              iii.
                                                     		 when they will be assessed;
                           
                            b. information about execution times;
                            c.
                                                     		 whether the client has a right to stop or amend a pre-authorised transmission or transfer, and/or settlement, or revoke authorisation for a transmission, transfer or settlement, including the required procedure to initiate stop-settlement orders, or revoke the authorisation for a subsequent transmission or transfer, and/or settlement;
                            d.
                                                     		 the client’s and the VASP’s respective liabilities for any unauthorised, mistaken, or accidental transmission or transfer, and/or settlement;
                            e. general error-resolution rights that apply to transmission or transfer, and/or settlement;
                            f.
                                                     		 the client’s right to receive periodic account statements and Virtual Asset valuations from the VASP;
                            g.
                                                     		 the client’s right to receive a receipt or other evidence of a Virtual Asset transmission or transfer, and/or settlement; and
                            h.
                                                     		 to the extent relevant—
                           
                              i.
                                                     		 any ability of the VASP to vary unilaterally the terms of any contract with the client for the provision of VA Transfer and Settlement Services, and client’s right to terminate such contract. If the client is a Retail Investor, terms and conditions shall specify—
                           
                                1.
                                                     		 that any notice to vary unilaterally shall be provided by the VASP to the client no later than sixty [60] calendar days before the date on which any change is due to take effect; and
                                2.
                                                     		 that the client must have a right to terminate the contract without charge at any time before such a change takes effect, which the VASP shall also communicate at the time of giving notice.
                             
                                                     		 In respect of any other type of client, the VASP and the client may agree to waive such requirements; and
                           
                              ii.
                                                     		 any ability of the VASP and/or client to terminate a contract for the provisions of VA Transfer and Settlement Services. If the client is a Retail Investor, the terms and conditions shall—
                           
                                1.
                                                     		 specify that the client may terminate the contract at any time unless the client and the VASP have agreed a notice period of no more than thirty [30] calendar days; and
                                2.
                                                     		 that the VASP may terminate a contract by giving at least sixty [60] calendar days’ notice.
                           
                          3.
                                                     		 VASPs providing VA Transfer and Settlement Services may not exclude, or attempt to exclude, any form of actual or potential liability in respect of the VA Transfer and Settlement Services by virtue of having provided the disclosures required under this Rule II.D of this VA Transfer and Settlement Services Rulebook.
                           

                        • E. Client Reporting & Valuation

                          1. VASPs providing VA Management and Investment Services shall, at least monthly, provide to each client a written statement containing the following information—
                           
                            a. the total value of Virtual Assets in a client’s account;
                            b. all transactions entered into between the VASP and the client in the reporting period; and
                            c. the change in amount and valuation of Virtual Assets in a client’s account [both total and during the reporting period].
                           
                          2. VASPs providing VA Management and Investment Services shall ensure that all assets under management are subject to ongoing independent valuation.
                          3. VASPs shall have comprehensive and well documented valuation policies and procedures in place to ensure the production of timely and accurate valuation in accordance with Rule II.E.1 of this VA Management and Investment Services Rulebook.
                           

                          • E Exchange, Trade or Conversion

                            1.
                                                         		 In addition to all other requirements in this VA Transfer and Settlement Services Rulebook, VASPs providing VA Transfer and Settlement Services which involve any exchange, trade or conversion between the Virtual Assets received and another Virtual Asset or fiat currency, must—
                             
                              a. continue to act honestly, fairly and in good faith;
                              b.
                                                         		 provide a description of how they undertake any exchange, trade or conversion, to their clients or potential clients, including whether they use any third party, and the nature of the role of such third party;
                              c.
                                                         		 disclose all relevant terms and conditions associated with the exchange, trade or conversion, to their clients or potential clients, including but not limited to applicable fees;
                              d.
                                                         		 do everything within their control to ensure completion of the transmission or transfer, and/or settlement thereafter, including any such exchange, trade or conversion, subject only to limitations or malfunctioning of any DLT in the event they are not controlled directly or indirectly by the VASP or its Group; and
                              e.
                                                         		 remain directly responsible to their clients for the completion of the transmission or transfer, and/or settlement as relevant.
                             

                          • F. Fees and Charges

                            1. No payment may be made, or benefit given, to the VASP out of any Virtual Assets under its management, whether by way of fees for its services, reimbursement of expenses or otherwise, unless it is permitted by the Client Agreement and the Client Agreement specifies how it will be calculated, accrued, and when it will be paid.
                            2. VASPs must not introduce a new category of fees for their services or make any increase in the current rate or amount of its fees payable out of any Virtual Assets under its management unless the VASP has given not less than ninety [90] calendar days’ written notice of that introduction or increase and of the date of its commencement to its clients.
                             

                            • F Receipts

                              1.
                                                             		 Immediately after receiving client instructions to initiate a transmission or transfer, and/or settlement, a VASP must provide the client with a receipt including the following information—
                               
                                a.
                                                             		 confirmation of whether the transmission or transfer, and/or settlement has been successfully initiated;
                                b. date and time of receipt of the client’s instructions;
                                c. amount and type of Virtual Assets in the transmission or transfer, and/or settlement;
                                d.
                                                             		 name and unique identifier of the Entity to which transmission or transfer, and/or settlement is to be credited;
                                e. name of the client who made the transmission or transfer, and/or settlement;
                                f. a breakdown of all fees paid or payable by the client and when they are paid or payable;
                                g.
                                                             		 a breakdown of all exchanges, trades or conversions to be completed in the course of any transmission or transfer, and/or settlement [if applicable];
                                h. transaction identification details and/or reference;
                                i.
                                                             		 the VASP’s name and contact information, including information necessary for the client to ask a question or file a complaint;
                                j. a statement regarding the VASP’s liability for non-delivery or delayed delivery; and
                                k.
                                                             		 a statement regarding the VASP’s refund policy.
                               
                              2.
                                                             		 Immediately after a transmission or transfer, and/or settlement has been finalised, a VASP must provide the client with a receipt including the following information—
                               
                                a.
                                                             		 date and time of the transmission or transfer, and/or settlement being credited to the recipient;
                                b. amount and type of Virtual Assets in the transmission or transfer, and/or settlement;
                                c. transaction identification details and/or reference; and
                                d.
                                                             		 full details of all exchanges, trades or conversions completed in the course of the transmissions or transfers, and/or settlements [if applicable], including times, rates of exchange and all fees.
                               
                              3.
                                                             		 VASPs must maintain all receipts provided in accordance with Rules II.F.1 and II.F.2 of this VA Transfer and Settlement Services Rulebook for a period of eight [8] years.
                               

                            • G. Marketing

                              1. VASPs providing VA Management and Investment Services shall not represent in any Marketing that their services involve the distribution of “staking” rewards in relation to any DLT with a “proof-of-stake” consensus mechanism or any other similar protocol-based rewards to clients, unless the payments actually made to clients by the VASP directly originate from such “staking” rewards or other similar protocol-based rewards.
                               

                            • H. Management Practices

                              1. When providing VA Management and Investment Services in respect of Virtual Assets on behalf of clients, VASPs shall act in the best interests of their clients at all times. Factors that VASPs may consider when assessing a client’s best interests may include, but are not limited to client suitability, the price of Virtual Assets, costs, speed, likelihood of execution and settlement, size, nature, conditions of custody, and such other conditions as are relevant to the management of Virtual Assets, provided that the VASP must act in accordance with any specific instructions provided by the client.
                               

                            • I. Receipt and Transmission of Orders

                              1. VASPs shall establish and implement procedures and arrangements for the prompt and proper transmission of client’s instructions in respect of Virtual Assets for which VA Management and Investment Services are provided.
                              2. VASPs shall not receive any remuneration, discount or other benefit for routing clients’ orders to a particular trading platform or VASP in the course of the provision of VA Management and Investment Services unless disclosed in the Client Agreement and the VASP has obtained valid acceptance in accordance with applicable laws.
                              3. VASPs shall not misuse information relating to clients’ Virtual Assets and their management thereof.
                               

                            • J. Risk Management and Due Diligence

                              1. In addition to all requirements in the Company Rulebook, VASPs shall ensure that liquidity risk and market risk are each monitored and tested regularly, and appropriate measures put in place as required to address any such risk in a prompt manner.
                              2. All such risk management and due diligence must be regularly audited by an independent third party and provided to VARA upon request.
                               

                            • K. Client Agreements

                              1. In addition to all requirements in the Market Conduct Rulebook, Client Agreements for VA Management and Investment Services shall set out the following, to the extent applicable—
                               
                                a. description of Virtual Assets in-scope of VA Management and Investment Services that are sufficient to identify them;
                                b. the respective rights of the VASP, the client and any other Entity involved in the VA Management and Investment Services in respect of Virtual Assets that are the subject of the Client Agreement, including in respect of staking;
                                c. how and when any proceeds are paid or payable, or in the case of variable proceeds, how they are calculated and how the proceeds may vary and how such variations will be communicated by the VASP to the client;
                                d. whether or not Virtual Assets of a client used by a VASP in the course of, or in connection with, any VA Management and Investment Services, shall be held on behalf of the client;
                                e. the consent of the client shall be clearly obtained in accordance with all applicable laws for the use of any Virtual Assets used in the course of the provision of VA Management and Investment Services by the VASP;
                                f. any right of the client to withdraw any Virtual Assets held by the VASP;
                                g. a statement explaining that client Virtual Assets used by the VASP in the course of the provision of VA Management and Investment Services may be at risk, including the types and nature of such risks, and a statement on the likelihood and severity of any losses which may be suffered;
                                h. any rights of the VASP to vary the terms of the Client Agreement;
                                i. any rights of the VASP and the client to terminate the Client Agreement and the consequences of termination;
                                j. any terms relating to any fluctuation in value of the Virtual Assets to which the Client Agreement relates;
                                k. consequences of any event of default;
                                l. an explanation of the risks the client may be exposed to;
                                m. full details of the VASP’s client complaints procedure; and
                                n. whether the VASP receives any remuneration, discount or other benefit for routing clients’ orders to a particular trading platform or VASP in the course of provision of VA Management and Investment Services.
                               

              • Schedule 1 – Definitions

                Term Definition
                “Board” has the meaning ascribed to it in the Company Rulebook.
                “Client Agreements” has the meaning ascribed to it in the Market Conduct Rulebook.
                “Company Rulebook” means the Company Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
                “Compliance and Risk Management Rulebook” means the Compliance and Risk Management Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
                “Directive” has the meaning ascribed to it in the Regulations.
                “Distributed Ledger Technology” or “DLT” has the meaning ascribed to the term “Distributed Ledger Technology” in the Dubai VA Law.
                “Dubai VA Law” means Law No. [4] of 2022 Regulating Virtual Assets in the Emirate of Dubai, as may be amended from time to time.
                “Emirate” means all zones across the Emirate of Dubai, including Special Development Zones and Free Zones but excluding the Dubai International Financial Centre.
                “Entity” means any legal entity or individual.
                “Licence” has the meaning ascribed to it in the Regulations.
                “Licensed” means having a valid Licence.
                “Market Conduct Rulebook” means the Market Conduct Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
                “Marketing” has the meaning ascribed to it in Administrative Order No. [01] of 2022: Relating to Regulation of Marketing, Advertising and Promotions Related to Virtual Assets.
                “Regulations” means the Virtual Assets and Related Activities Regulations 2023, as may be amended from time to time.
                “Rule” has the meaning ascribed to it in the Regulations.
                “Rulebook” has the meaning ascribed to it in the Regulations.
                “Senior Management” has the meaning ascribed to it in the Company Rulebook.
                “Staff” has the meaning ascribed to it in the Company Rulebook.
                “Technology and Information Rulebook” means the Technology and Information Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
                “UAE” means the United Arab Emirates.
                “VA Activity” means the activities listed in Schedule 1 of the Regulations, as may be amended VARA from time to time.
                “VA Management and Investment Services” has the meaning ascribed to it in Schedule 1 of the Regulations.
                “VA Management and Investment Services Rulebook” means this VA Management and Investment Services Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
                “VARA” means the Dubai Virtual Assets Regulatory Authority.
                “VASP” means an Entity authorised by VARA to conduct VA Activity[ies] in the Emirate.
                “Virtual Asset” or “VA” has the meaning ascribed to it in the Dubai VA Law.

                 

                • Schedule 1 – Definitions

                  Term Definition
                  “AML/CFT” has the meaning ascribed to it in the Regulations.
                  "Board” has the meaning ascribed to it in the Company Rulebook.
                  “CBUAE” means the Central Bank of the United Arab Emirates.
                  “Client Agreements” has the meaning ascribed to it in the Market Conduct Rulebook.
                  “Company Rulebook” means the Company Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
                  “Distributed Ledger Technology” or “DLT” has the meaning ascribed to the term “Distributed Ledger Technology” in the Dubai VA Law.
                  “Dubai VA Law” means Law No. [4] of 2022 Regulating Virtual Assets in the Emirate of Dubai , as may be amended from time to time.
                  “Emirate” means all zones across the Emirate of Dubai, including Special Development Zones and Free Zones but excluding the Dubai International Financial Centre.
                  “Entity” means any legal entity or individual.
                  “Group” has the meaning ascribed to it in the Company Rulebook.
                  “Licence” has the meaning ascribed to it in the Regulations.
                  “Licensed” means having a valid Licence.
                  “Market Conduct Rulebook” means the Market Conduct Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
                  “Regulations” means the Virtual Assets and Related Activities Regulations 2023, as may be amended from time to time.
                  “Retail Investor” has the meaning ascribed to it in the Market Conduct Rulebook.
                  “Rule” has the meaning ascribed to it in the Regulations.
                  “Rulebook” has the meaning ascribed to it in the Regulations.
                  “Senior Management” has the meaning ascribed to it in the Company Rulebook.
                  “Technology and Information Rulebook” means the Technology and Information Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
                  “Travel Rule” has the meaning ascribed to it in the Compliance and Risk Management Rulebook.
                  “UAE” means the United Arab Emirates.
                  “VA Activity” means the activities listed in Schedule 1 of the Regulations, as may be amended from time to time.
                  “VA Transfer and Settlement Services” has the meaning ascribed to it in Schedule 1 of the Regulations.
                  “VA Transfer and Settlement Services Rulebook” means this VA Transfer and Settlement Services Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
                  “VA Wallet” has the meaning ascribed to the term “Virtual Asset Wallet” in the Dubai VA Law.
                  “VARA” means the Dubai Virtual Assets Regulatory Authority.
                  “VASP” means an Entity authorised by VARA to conduct VA Activity[ies] in the Emirate.
                  “Virtual Asset” or “VA” has the meaning ascribed to it in the Dubai VA Law.

      • Virtual Asset Issuance Rulebook

        • Introduction

          This Virtual Asset Issuance Rulebook [VA Issuance Rulebook] is issued by VARA pursuant to the Virtual Assets and Related Activities Regulations 2023 [the Regulations] and includes requirements that all Entities in the Emirate wishing to issue a Virtual Asset must follow.
           
          The requirements defined herein cover explicit categories and conditions to be met for VA issuances in each category, including but not limited to:
           
            • Category 1 VA issuances that require a VARA Licence;
            • Category 2 VA issuances that require VARA approval prior to issuance; 
            • Based on the definitions assigned to certain types of Virtual Assets, thresholds of financial and client exposure, and corporate market assurance and/or responsible reporting for Category 1 and Category 2 VA issuances specifically; and
            • Compliance with general Rules in this VA Issuance Rulebook relating to conduct of business principles [Part II], Whitepaper disclosure requirements [Part III], and ongoing compliance obligations post-issuance [Part IV] for all VA issuances.
           
          VARA views the Rules contained in this VA Issuance Rulebook as a starting point for the regulation of Virtual Assets which are issued by Entities in the Emirate and these Rules operate in addition to the regulation of VA Activities carried out in the Emirate.
           
          In order to address emerging risks and the continually evolving developments in the Virtual Assets sector globally and in the Emirate, VARA will continue to monitor these Rules and amend them from time to time. In addition to the Rules in this VA Issuance Rulebook, specific Rules or Directives for certain types of Virtual Assets [as defined by VARA] shall be made available from time to time.
           
          The most updated version of the Regulations, this VA Issuance Rulebook and any additional Rules or Directives shall be made available on VARA’s website.
           
          Capitalised terms in this VA Issuance Rulebook have the meanings defined herein or as defined in Schedule 1.
           
          DISCLAIMER
           
          Any Licence or approval granted by VARA under this VA Issuance Rulebook is not an endorsement of either [i] the Issuer or [ii] the Virtual Asset and must not be construed or considered as such.
           
          Unless otherwise specified in its communications, VARA makes no representation and does not provide any warranties regarding any Issuer or Virtual Asset including, but not limited to, their fitness for purpose, suitability or regulatory status in any jurisdiction other than the Emirate of Dubai, UAE.
           
          Any representation contrary to the above shall be deemed to be a breach of the Virtual Assets and Related Activities Regulations 2023.

        • Part I – Licence, Approval and Registration Requirements

          • A. General Requirement

            1. Any Entity in the Emirate that issues a Virtual Asset in the course of a business, must comply with this VA Issuance Rulebook, as may be amended by VARA from time to time.
            2. “In the course of a business” requirement. For the purposes of Rule I.A.1 of this VA Issuance Rulebook, in determining whether an Entity has issued a Virtual Asset in the course of a business, VARA shall retain sole and absolute discretion, with the following factors forming part of the consideration criteria—
             
              a. whether the Entity holds itself out as issuing the Virtual Asset in the course of a business;
              b. the regularity, scale and periodicity with which the Entity issues Virtual Assets;
              c. whether there is any direct or indirect commercial element to the Virtual Asset, or in how the Virtual Asset is issued, whether the Entity receives remuneration, incentive or other value in kind benefit, or if it is related to any commercial or business activity in any way;
              d. includes not-for-profit, non-profit and charitable organisations, foundations, associations and associated activity[ies];
              e. VA issuances that do not fall under Category 1, and are carried out solely for personal, non-commercial use, will not be deemed to be issued in the course of a business; and
              f. Category 1 VA issuances are, in all events without exception, deemed to be carried out in the course of a business.
             
            3. VARA will, from time to time, assign categorisations to the issuance of certain types of Virtual Assets depending on the nature of the issuance, the Virtual Asset or types of Virtual Assets. VARA may impose further specific or nuanced requirements on such issuances which, unless otherwise stated, will apply in addition to the requirement for the Issuer to obtain a Licence or prior approval from VARA.

          • B. Prohibited Virtual Assets

            1. As specified in the Regulations, issuing Anonymity-Enhanced Cryptocurrencies and all VA Activity[ies] related to them are prohibited in the Emirate.
             

          • C. VA issuance categories and prior requirements

            1. VA issuances in the Emirate are categorised, along with the applicable requirement prior to the Virtual Asset being issued, as follows—
             
            Category Applicable types of VA issuances Prior requirement
            Category 1
            issuance of—
            [i] Fiat-Referenced Virtual Assets [FRVAs], defined as types of Virtual Assets that purport to maintain a stable value in relation to the value of one or more fiat currencies, but do not have legal tender status in any jurisdiction, as more fully defined in the FRVA Rules. For the avoidance of doubt, and as stated in Rule B.3I.B.3 of the FRVA Rules, the issuance of any FRVA that purports to maintain a stable value in relation to the value of AED shall not be approved under this VA Issuance Rulebook and the FRVA Rules and shall remain under the sole and exclusive regulatory purview of the CBUAE; or
            [ii] other Virtual Assets as may be determined by VARA
            from time to time.
            		VARA Licence
            Category 2
            All issuances which do not constitute a Category 1 VA issuance,
            and—
            [i] by or involving Designated Non-Financial
            Businesses and Professions [DNFBPs]; or
            [ii] which satisfy any of the following—
            [a] a single transaction exceeding AED 40,000, or the equivalent amount in another fiat currency or Virtual Assets;
            [b] offered to one hundred and fifty [150] Entities or more, where such Entities are acting on their own account; or
            [c] over a period of twelve [12] months, starting with the beginning of the issuance, the total consideration, direct or indirect benefit, accrued to the Issuer exceeds AED 2,000,000, or the equivalent amount in another fiat currency or Virtual Assets.
            		Approval of the Issuer

             
            2. When determining the category of a VA issuance, VARA will consider all factors it deems appropriate in respect of such issuance, including the nature of all Virtual Assets or types of Virtual Assets involved.
            3. If any change proposed to be made to a Virtual Asset may result in its issuance no longer qualifying under the original categorisation in Rule I.C.1 of this VA Issuance Rulebook, the Issuer must comply with all requirements of the category under which the Virtual Asset will fall after such change is made. The Issuer must ensure all such future requirements are met prior to any proposed changes to the Virtual Asset taking effect which, for the avoidance of doubt, shall include the Issuer obtaining a Licence or prior approval from VARA where necessary.

          • D. Category 1 VA issuance

            1. No Entity in the Emirate may carry out a Category 1 VA issuance, unless it is authorised and Licensed by VARA for the VA issuance.
            2. As stated in the Regulations, carrying out a Category 1 VA issuance is a VA Activity. In addition to compliance with this VA Issuance Rulebook and all other Regulations, Rules and Directives as communicated by VARA in its Licence, or otherwise from time to time, any Entity seeking to carry out a Category 1 VA issuance will be required to comply with the following Rulebooks—
             
              a. Company Rulebook;
              b. Compliance and Risk Management Rulebook;
              c. VARATechnology and Information Rulebook; and
              d. Market Conduct Rulebook.
             
            3. For the avoidance of doubt, all Rules in Rulebooks apply cumulatively in addition to all other requirements in the Regulations, Rules and Directive and as such, in the event of overlap the highest standard of compliance must be met at all times.
            4. Licensing process. All Entities seeking a Licence from VARA to carry out a Category 1 VA issuance shall adhere to the licensing process as prescribed by VARA from time to time when applying for the Licence. 
            5. FRVA Rules. Any Entity seeking to carry out the issuance of an FRVA will, in addition to compliance with all other Regulations, Rules and Directives as communicated by VARA in its Licence or otherwise from time to time, be required to comply with the FRVA Rules in ANNEX 1: FIAT-REFERENCED VIRTUAL ASSETS ISSUANCE RULES of this VA Issuance Rulebook at all times.

          • E. Category 2 VA issuance

            1. No Entity in the Emirate may carry out a Category 2 VA issuance, unless it has obtained prior approval from VARA to carry out such VA issuance.
            2. Approval process. An Entity seeking to obtain approval from VARA to issue a Virtual Asset under Rule I.E.1 of this VA Issuance Rulebook will be required to provide all relevant information as requested by VARA in the approval process, including but not limited to the following—
             
              a. the purpose and/or use of the Virtual Asset;
              b. the nature of the business and/or activities for which the Virtual Asset will be used;
              c. the Whitepaper;
              d. the identity, full details and, if applicable, ownership of the Issuer, including a description of its experience and whether it, or its relevant individuals, have been the subject of any claims in the past ten [10] years involving dishonesty, fraud, financial crime or an offence under laws relating to companies, banking, insolvency, money laundering, insider trading or terrorism financing;
              e. the financing of the Issuer’s business [including financial statements, if any];
              f. whether issuing the Virtual Asset will be the basis for funding any business or other venture;
              g. how will any proceeds or other consideration [whether monetary or value in kind] received from issuing the Virtual Asset be used;
              h. who will receive any proceeds or other consideration, what proportion they will receive and how much of that will be directly attributable for the facilitation of the purpose ascribed in Rule I.E.2.g of this VA Issuance Rulebook;
              i. the risks related to the business and/or activities in relation to which the Virtual Asset will be issued; and
              j. the governance structure, or quality control plan for the business and/or activities, and the Entities involved.
             
            3. Applicable Rules. On receiving approval by VARA, an Issuer will be required to comply with all Rules or requirements that VARA may impose on the Issuer as a condition and ongoing requirement of any approval. As a minimum standard, Issuers will be required to comply with all Rules in this VA Issuance Rulebook, however, VARA may impose Rules in addition to, or disapply any of, the Rules set out in this VA Issuance Rulebook depending on the considerations which it deems relevant to the nature of the Virtual Asset being issued and/or the Issuer.
            4. An Issuer who has obtained approval from VARA under Rule I.E.1 of this VA Issuance Rulebook must re-seek approval from VARA prior to making any material change to any Virtual Asset which it has issued following approval from VARA.
             

          • F. Other VA issuances

            1. All Entities in the Emirate that carry out any VA issuance, whether or not they are required to obtain a VARA Licence or approval prior to such VA issuance, must comply with all Rules in this VA Issuance Rulebook, including specifically Parts II – IV of this VA Issuance Rulebook at all times.
            2. VARA reserves the right, acting in its sole and absolute discretion, to determine that a VA issuance qualifies as a Category 1 or Category 2 VA issuance, regardless of whether all requirements listed in Rule I.C.1 are met, and to impose additional requirements on the Issuer.

          • G. Exempt Entities

            1. Exempt Entities may issue Permitted VAs, including selling such Permitted VAs in exchange for fiat currency or other Virtual Assets, without prior approval from VARA, provided that—
             
              a. the consideration received by the Exempt Entity in connection with a VA issuance project does not exceed AED 2,000,000 per project, or the equivalent amount in fiat currency or Virtual Assets;
              b. the aggregate consideration received by the Exempt Entity in connection with all its VA issuances does not exceed AED 10,000,000, or the equivalent amount in fiat currency or Virtual Assets;
              c. the Exempt Entity complies with all other Rules in this VA Issuance Rulebook, including Parts II – IV of this VA Issuance Rulebook at all times;
              d. all transactions for which the Exempt Entity uses an intermediary are handled by Licensed Distributors only; and
              e. VARA shall, in any event, have the sole and absolute discretion to decide whether an Entity is an Exempt Entity for the purposes of the Regulations and this VA Issuance Rulebook.
             
            2. Compliance requirements. All Virtual Assets issued in accordance with this Rule I.G of this VA Issuance Rulebook shall remain subject to VARA’s supervision, examination and enforcement at all times in accordance with Part V of this VA Issuance Rulebook.

          • H. Revocation of Approval

            1. VARA may, in its sole and absolute discretion, revoke an approval if the Entity which has received the approval—
             
              a. has not issued the Virtual Asset within six [6] months after the approval has been granted;
              b. has obtained the approval by making false or misleading statements including, but not limited to, in the Whitepaper, in providing the information in Rule I.E.2 above or in any other communications with VARA or the public;
              c. no longer meets, or is in breach of, any of the conditions imposed by VARA in relation to the approval;
              d. has infringed any Regulation, Rule or Directive;
              e. has infringed any regulatory requirements applicable in other jurisdictions;
              f. is Insolvent, subject to Insolvency Proceedings or otherwise has been put under an orderly wind down plan in accordance with applicable insolvency laws; or
              g. has decided to stop its operations.
             
            2. Entities shall immediately notify VARA of any of the situations referred to in Rule I.H.1 of this VA Issuance Rulebook.
            3. In respect of any Virtual Asset which has already been issued or in the process of being issued, VARA may require an Issuer to suspend issuing the Virtual Asset, or issuing further Virtual Assets, if VARA believes a Virtual Asset, how it is being issued or the Issuer does not comply with any aspect of this VA Issuance Rulebook. VARA may also impose additional conditions and/or take further enforcement action within its power including, but not limited to, imposing fines or penalties.

        • Part II – General Rules

          1. Issuers shall comply with the following general Rules when conducting all their business from/through the Emirate, including issuing any Virtual Asset—
           
            a. Integrity - honesty and fairness: All Issuers should act truthfully, justly and equitably, in good faith serving the best interests of their clients, yet at all times preserving market integrity including, but not limited to, using clear and transparent wording in all communications and public disclosures, treating all holders of the Virtual Asset fairly, and engaging in ethical market practices;
            b. Diligence: All Issuers must act with the due skill, care and diligence reasonably expected of an Issuer taking into the account the nature of the Virtual Asset;
            c. Capabilities and resource: All Issuers must have and effectively employ the necessary resources [including technical, financial and otherwise], for the sound, effective and efficient operation of the issuance taking into the account the nature of the Virtual Asset, as well as all applicable legal and regulatory requirements;
            d. Effective disclosures: All Issuers must ensure that all disclosures are clear, concise and effective and should contain all information necessary for its clients, customers or investors [including holders or prospective holders of the Virtual Asset] to make an informed decision and be kept up-to-date. All Issuers should dispatch information in a timely manner if ongoing disclosure is required by any relevant authorities including, but not limited to, VARA;
            e. Legal and regulatory compliance: All Issuers must comply with all applicable laws and regulatory requirements in the UAE and as may apply to their business or operations in any jurisdiction at all times including, but not limited to, consumer protection laws; and
            f. Environmental responsibility: All Issuers must act in an environmentally responsible manner including, but not limited to, mitigating negative environmental impacts of the Virtual Asset and disclosing how they identify, assess and manage other climate-related risks relevant to the issuance and/or the Virtual Asset.
           

        • Part III – Whitepapers and Public Disclosures

          • A. Whitepapers

            1. Initial Whitepaper. Prior to offering, selling, or otherwise making a Virtual Asset available, Issuers shall provide the following disclosures in a single easily accessible location in a machine-readable format, or in any form as may be prescribed from time to time by VARA [a Whitepaper]—
             
              a. a detailed description of the Issuer and an overview of the main Entities involved in the design, development, offering or Marketing of the Virtual Asset, to the extent applicable to the Issuer, including whether any individual has been convicted of any offence of dishonesty, fraud, financial crime or an offence under laws relating to companies, banking, insolvency, money laundering and insider dealing, and, to the extent permissible under applicable laws, whether any individual is subject to ongoing inquiries or investigations in respect of such offences;
              b. a detailed description of the Virtual Asset that will be issued, including, but not limited to, all features, uses or other characteristics;
              c. a detailed description of the rights and obligations attached to the Virtual Asset including, but not limited to, any voting rights, entitlement to rewards or value in kind, the nature of such rewards or value in kind, any other financial or non-financial interests and the procedures and conditions for holders to exercise those rights;
              d. the planned use of any proceeds or consideration received by the Issuer from issuing the Virtual Asset [if applicable], including fiat currencies and any other tangible assets or Virtual Assets;
              e. a detailed description of the issuance structure of the Virtual Asset, in particular the number of Virtual Assets that will be issued, the issuance schedule, when all the Virtual Assets will be made available and how many will be allocated or retained by the Issuer;
              f. whether Entities other than the Issuer which will be involved in the issuance [e.g. Licensed Distributors] will be allocated Virtual Assets, either at issuance or as part of the issuance schedule and, if so, how many;
              g. any terms and conditions applicable to holding the Virtual Assets including, but not limited to, periods during which a Virtual Asset cannot be used or redeemed;
              h. information on all underlying technology, including, but not limited to, which DLTs a Virtual Asset is compatible with, all relevant DLT-related standards used in its creation and all information required by holders in respect of the custody and transfer of such Virtual Assets;
              i. whether the Virtual Asset has been subject to an independent smart contract audit and the date of the most recent audit;
              j. the issue price [if applicable];
              k. a description of how the Issuer determines the value of any Virtual Asset [if applicable], including how any redeemable value is accrued;
              l. detailed descriptions of any fees or charges associated with the Virtual Asset [if applicable];
              m. any material legal or regulatory considerations applicable to owning, storing, transferring, or otherwise using the Virtual Asset [if applicable]; and
              n. a statement on the environmental and climate-related impact of the Virtual Asset.
             
            2. No Issuer may exclude or attempt to exclude any form of actual or potential civil liability in respect of providing inaccurate or misleading information.
            3. Issuers must publish the Whitepaper prior to making the Virtual Asset available to the public, including any offer or Marketing. The Whitepaper shall remain subject to the Rules set out above for as long as the Virtual Asset is available to the public.
            4. Whitepaper updates. Issuers must ensure the Whitepaper is accurate and complete at all times including, but not limited to, making any necessary changes to the Whitepaper, or publishing an updated Whitepaper. Issuers must take all reasonable steps to ensure holders of Virtual Assets are notified of any updates prior to any changes taking effect, except that, prior notification shall not be required where an Issuer needs to implement any update in response to a security or other threat or which is in the best interests of maintaining the integrity of the Virtual Asset as disclosed in the Whitepaper.
            5. In the event of an update to the Whitepaper, Issuers must clearly state the date on which the Whitepaper has been updated and ensure all previous versions remain easily accessible in the same format and location in which they were initially published.
             

          • B. Risk Disclosure Statements

            1. Initial Risk Disclosure Statement. Issuers must publish a statement that includes a detailed description of all material risks related to the Virtual Assets being issued as applicable in a machine-readable format [Risk Disclosure Statement]. Risk Disclosure Statements shall be made available in the same easily accessible location as, but remain separate from, the Whitepaper.
            2. Risk Disclosure Statement updates. Issuers must ensure the Risk Disclosure Statement is accurate and complete at all times including, but not limited to, making any necessary updates to the Risk Disclosure Statement, or publishing an updated Risk Disclosure Statement. Issuers must take all reasonable efforts to ensure holders of such Virtual Assets are notified of any updates.
            3. In the event of an update to the Risk Disclosure Statement, Issuers must clearly state the date on which the Risk Disclosure Statement has been updated and ensure all previous versions remain easily accessible in the same format and location in which they were initially published.
             

        • Part IV – Compliance Obligations of Issuers

          • A. Licensed Distributors

            1. In addition to any other legal or regulatory requirements applicable to a Virtual Asset, issuing a Virtual Asset and/or the Issuer, Issuers must comply with Rules IV.A-G of this VA Issuance Rulebook.
            2. If the issuance of a Virtual Asset is carried out on behalf of the Issuer by a Licensed Distributor, compliance with Rules IV.B and IV.C of this VA Issuance Rulebook is adequately demonstrated by the Issuer, provided that the Issuer must take all reasonable steps to ensure the Licensed Distributor is appropriately Licensed and maintain a record of the appointment and the steps it has taken.
            3. Licensed Distributors who have been appointed on behalf of an Issuer must comply with Rules IV.B and IV.C of this VA Issuance Rulebook as a minimum, to the extent such requirements are not already met through compliance with all Regulations, Rules, Directives or conditions of the Licence applicable to the Licensed Distributor.
             

          • B. Technology and Security

            1. Risk assessment and controls. Issuers must ensure that they implement systems and controls necessary to address risks including, but not limited to, cybersecurity-related risks to the Virtual Asset and the issuance of such Virtual Asset. Such systems and controls should address a number of factors including, but not limited to, the nature, scale and complexity and the level of risk inherent with the Virtual Asset.
            2. Issuers must implement a technology governance and risk assessment framework which must be comprehensive and proportionate to the nature, scale, and complexity of the risks inherent to all Virtual Assets they issue. The technology governance and risk assessment framework should apply to all technologies relevant to the Virtual Asset.
            3. Issuers must ensure that their technology governance and risk assessments are capable of determining the necessary processes and controls that they must implement in order to adequately mitigate any risks identified. In particular, Issuers must ensure that their technology governance and risk assessment frameworks include a consideration of the applicability of international standards, or industry best practice codes.
            4. Issuers must ensure that their technology governance and risk assessment frameworks address governance policies and system development controls for ongoing development and maintenance, such as a development, maintenance and testing process, back up controls, capacity and performance planning and availability testing.
            5. Testing and audit. Issuers must engage a qualified and independent third-party auditor to conduct—
             
              a. comprehensive audits of the effectiveness, enforceability and robustness of all smart contracts used for the purposes of a Virtual Asset; and
              b. vulnerability assessments and penetration testing.
             
            6. Issuers should maintain effective internal functions and measures for continuous monitoring of their operations and processes. In particular, Issuers must perform the following on a regular basis, and as may be requested by VARA—
             
              a. security testing on both infrastructure and applications; and
              b. internal system and external system vulnerability audits.
             
            7. Evidence of tests and audits must be documented by Issuers and be made immediately available for inspection by VARA upon request.
             

          • C. Anti-Money Laundering and Combating the Financing of Terrorism [AML/CFT]

            1. Issuers must comply with all Federal AML-CFT Laws as well as all other laws, regulation, rules and guidelines in respect of AML/CFT applicable to their business or operations in any jurisdiction at all times.
            2. Controls and systems. Issuers should have effective AML/CFT controls and systems in place which can adequately manage the AML/CFT risks relevant to all Virtual Assets that they issue.
            3. Risk assessment. In implementing adequate and appropriate AML/CFT policies, procedures, and controls to detect and prevent illicit activities, Issuers must conduct AML/CFT business risk assessments. The AML/CFT business risk assessments must be designed and implemented to assist the Issuer to better understand its risk exposure, and areas in which it should prioritise allocation of resources in its AML/CFT activities. This includes identifying and assessing the AML/CFT risks arising from the development and use of new or existing—
             
              a. Virtual Assets [in particular, Anonymity-Enhanced Cryptocurrencies];
              b. Virtual Asset related products or services [in particular, methods in which Anonymity-Enhanced Transactions can be conducted];
              c. Virtual Asset related business and professional practices; and
              d. technologies associated with VA Activities.
             

          • D. Marketing Regulations

            1. Issuers must comply at all times with Administrative Order No. [01] of 2022: Relating to Regulation of Marketing, Advertising and Promotions Related to Virtual Assets and Administrative Order No. [02] of 2022: Pursuant to Issued Administrative Order No. [01] of 2022: Relating to Regulation of Marketing, Advertising and Promotions Related to Virtual Assets, as may be amended or superseded from time to time [the Marketing Regulations].
             

          • E. Personal Data Protection

            1. Issuers must comply with all applicable data protection and data privacy requirements in all relevant jurisdiction[s]—
             
              a. within the UAE including, but not limited to, the PDPL and any sectoral or free zone laws and regulations that may apply to the Issuer; and
              b. any data protection laws outside of the UAE that may apply to the Issuer’s activities wheresoever conducted.
             

          • F. Tax Reporting & Compliance

            1. Issuers must, at all times, comply with all tax reporting obligations under applicable laws including, but not limited to, under the Foreign Account Tax Compliance Act [FATCA] where applicable.
             

          • G. Books and Records

            1. Issuers must keep and preserve adequate books and records relating to all Virtual Assets that they issue and, as a minimum, all necessary information to demonstrate compliance with this VA Issuance Rulebook.
            2. Notwithstanding any requirements in other applicable laws or regulations regarding the retention of data or information, such records must be kept for a period of eight [8] years from their date of creation and in a condition that will allow VARA to determine the Issuer’s compliance with its obligations under this VA Issuance Rulebook.
             

        • Part V – Supervision, Examination and Enforcement

          1. Issuers are reminded that under the Dubai VA Law and the Regulations, VARA has supervisory, examination and enforcement powers in relation to all Virtual Assets and VA Activities in the Emirate.
          2. Issuers must provide VARA with any books or other records requested by VARA to facilitate any investigation and/or examination into the Issuer’s compliance with its obligations under the Regulations including, but not limited to, this VA Issuance Rulebook.
          3. Issuers shall ensure that VARA can access all necessary data to perform its examination responsibilities including, but not limited to, that doing so does not violate the local laws of any other jurisdiction in which the Issuer operates.
           

        • Schedule 1 – Definitions

          Term Definition
          “AML/CFT” has the meaning ascribed to it in the Regulations.
          “Anonymity-Enhanced Cryptocurrencies” has the meaning ascribed to it in the Regulations.
          “Anonymity-Enhanced Transactions” means Virtual Asset transactions denominated in Virtual Assets which are not Anonymity-Enhanced Cryptocurrencies, but which prevent the tracing of transactions.
          “Broker-Dealer Services” has the meaning ascribed to it in Schedule 1 of the Regulations.
          “Category 1” has the meaning ascribed to it in Rule I.C.1 of this VA Issuance Rulebook.
          “Category 2” has the meaning ascribed to it in Rule I.C.1 of this VA Issuance Rulebook.
          “Company Rulebook” means the Company Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
          “Compliance and Risk Management Rulebook” means the Compliance and Risk Management Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
          “Designated Non-Financial Businesses and Professions” or “DNFBPs” has the meaning ascribed to it in Federal AML-CFT Laws.
          “Directive” has the meaning ascribed to it in the Regulations.
          “Distributed Ledger Technology” or “DLT” has the meaning ascribed to the term “Distributed Ledger Technology” in the Dubai VA Law.
          “Dubai VA Law” means Law No. [4] of 2022 Regulating Virtual Assets in the Emirate of Dubai, as may be amended from time to time.
          “Emirate” means all zones across the Emirate of Dubai, including Special Development Zones and Free Zones but excluding the Dubai International Financial Centre.
          “Exempt Entities” has the meaning ascribed to it in the Regulations.
            has the meaning ascribed to it in Schedule 1 of the Regulations.
          “FATCA” means the United States Foreign Account Tax Compliance Act.
          “Federal AML-CFT Laws” has the meaning ascribed to it in the Regulations.
          “Fiat-Referenced Virtual Asset” or “FRVA” has the meaning ascribed to it in the FRVA Rules.
          “FRVA Rules” means the Fiat-Referenced Virtual Assets Issuance Rules in ANNEX 1: FIAT-REFERENCED VIRTUAL ASSETS ISSUANCE RULES of this VA Issuance Rulebook.
          “Insolvency Proceedings” has the meaning ascribed to it in the Regulations.
          “Insolvent” has the meaning ascribed to it in the Regulations.
          “Issuer” means the Entity responsible for the issuance of a Virtual Asset.
          “Licence” has the meaning ascribed to it in the Regulations.
          “Licensed” means having a valid Licence.
          “Licensed Distributor” means a VASP Licensed by VARA to carry out either Broker-Dealer Services or Exchange Services.
          “Market Conduct Rulebook” means the Market Conduct Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
          “Marketing” has the meaning ascribed to it in the Marketing Regulations.
          “Marketing Regulations” has the meaning ascribed to it in Rule IV.D.1 of this VA Issuance Rulebook.
          “Non-Redeemable & Non-Transferable Virtual Asset”
          means a Virtual Asset that—
          [a] may only be used solely within platforms operated by the Issuer;
          [b] is not redeemable or exchangeable for real-world goods, services, discounts, purchases or otherwise have no market, use, or application outside of the platforms;
          [c] cannot be converted into, exchanged or redeemed for, fiat currency, value in kind or other Virtual Assets; and
          [d] cannot be transferred between VA Wallets.
          “PDPL” means the Federal Decree-Law No. [45] of 2021 on the Protection of Personal Data.
          “Personal Data” has the meaning ascribed to it in the PDPL.
          “Permitted VAs”
          means the following types of Virtual Assets—
          [a] Non-Redeemable & Non-Transferable Virtual Assets;
          [b] Redeemable Closed-Loop & Non-Transferable Virtual     Assets; and
          [c] other Virtual Assets as may be determined by VARA from     time to time.
          “Redeemable Closed-Loop & Non-Transferable Virtual Asset”
          means a Virtual Asset that can be redeemed or exchanged for goods, services, discounts, or purchases with the Issuer and/or other merchants designated by the Issuer, but—
          [a] cannot be converted into, or exchanged or redeemed for, fiat currency;
          [b] is not otherwise intended by the Issuer to be used or accepted as payment means outside platforms operated by the Issuer or designated merchants; and
          [c] cannot be transferred between VA Wallets other than for the purposes of redemption from the Issuer or designated merchants.
          “Regulations” means the Virtual Assets and Related Activities Regulations 2023, as may be amended from time to time.
          “Risk Disclosure Statement” has the meaning ascribed to it in Rule III.B.1 of this VA Issuance Rulebook.
          “Rule” has the meaning ascribed to it in the Regulations.
          “Technology and Information Rulebook” means the Technology and Information Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
          “UAE” means the United Arab Emirates.
          “VA Activity” means the activities listed in Schedule 1 of the Regulations, as may be amended from time to time.
          “VA Issuance Rulebook” means this Virtual Asset Issuance Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
          “VARA” means the Dubai Virtual Assets Regulatory Authority.
          “VA Wallet” has the meaning ascribed to the term “Virtual Asset Wallet” in the Dubai VA Law.
          “Virtual Asset” or “VA” has the meaning ascribed to it in the Dubai VA Law.
          “Whitepaper” has the meaning ascribed to it in Rule III.A.1 of this VA Issuance Rulebook.
          “Working Day” has the meaning ascribed to it in the Regulations.

           

        • Annex 1: Fiat-Referenced Virtual Assets Issuance Rules

          • Part I – Approval Requirements

            • A. Interpretation

              1.
                             		 Fiat-Referenced Virtual Asset [FRVA] means a type of Virtual Asset that purports to maintain a stable value in relation to the value of one or more fiat currencies but does not have legal tender status in any jurisdiction. An FRVA is neither issued nor guaranteed by any jurisdiction and fulfils its functions only by use and acceptance within the community of users of the FRVA.
              2. As stated in Rule I.B.3 of these FRVA Rules, the issuance of any FRVA that purports to maintain a stable value in relation to the value of AED shall not be approved under these FRVA Rules and shall remain under the sole and exclusive regulatory purview of the CBUAE.
              3.
                             		 FRVAs do not include Virtual Assets which are—
               
                a. representations of any equity claim;
                b. issued by central banks acting in their monetary authority capacity [e.g. central bank digital currencies [CBDCs]]; or
                c.
                             		 tokenised bank deposits used only for interbank settlement purposes.
               
              4.
                             		 Reference Currency means, in relation to an FRVA, a VARA-approved fiat currency—
               
                a. the value of which an FRVA purports to maintain a stable reference to;
                b. which is controlled by a central bank of any country[ies] or territory[ies] which are not subject to any sanctions in accordance with Federal AML-CFT Laws;
                c. which has the status of legal tender; and
                d.
                             		 which is required to be accepted within a given jurisdiction.
               
              4.
                             		 Reserve Assets means, for the purposes of these FRVA Rules, the pool of assets maintained in accordance with Rule III.B of these FRVA Rules and as approved by VARA. Reserve Assets are not Client Money or Client VAs, as defined in the Compliance and Risk Management Rulebook.
               

            • B. General requirements for VARA approval

              1.
                             		 As stated in Rule I.C.1 of the VA Issuance Rulebook, the issuance of an FRVA is a Category 1 VA issuance and as such is a VA Activity. In addition to compliance with these FRVA Rules, and all other Regulations, Rules and Directives as communicated by VARA in its Licence or otherwise from time to time, any Entity seeking to carry out the issuance of an FRVA will be required to comply with the following Rulebooks—
               
                a. Company Rulebook;
                b. Compliance and Risk Management Rulebook;
                c. Technology and Information Rulebook;
                d. Market Conduct Rulebook; and
                e. VA Issuance Rulebook.
               
              2.
                             		 Approval conditions. VARA may, in its sole and absolute discretion, impose conditions on any approvals granted for the issuance of an FRVA by a VASP including, but not limited to—
               
                a.
                             		 segregation of an Entity’s business or operations in relation to VA issuances and VA Activities [or other similar businesses and activities, if applicable] by implementing and strictly enforcing policies and procedures;
                b.
                             		 provision of further information to demonstrate the VASP’s ability to comply with any Regulation, Rule or Directive; and/or
                c.
                             		 any additions or modifications to requirements set out in any Regulation, Rule and/or Directive.
               
              3.
                             		 AED as Reference Currency. In addition to Regulation III.A.4, the issuance of any Virtual Asset that purports to maintain a stable value in relation to the value of AED shall remain under the sole and exclusive regulatory purview of the CBUAE. Entities seeking to issue any such Virtual Asset in the Emirate must comply with any applicable CBUAE regulation.
               
              4.
                             		 Currencies of sanctioned countries or territories. VASPs may not have as a Reference Currency any currency issued by any country[ies] or territory[ies] which are subject to sanctions under Federal AML-CFT Laws.
               

            • C. Significant FRVA Issuers

              1.
                             		 VARA may, in its sole and absolute discretion, designate any VASP Licensed to issue an FRVA as a Significant FRVA Issuer at the time of issuing a Licence or anytime thereafter.
              2.
                             		 In designating a VASP as a Significant FRVA Issuer, VARA may consider all factors relevant to the VASP and/or the FRVA issued by the VASP, including but not limited to—
               
                a. the number of holders of the FRVA;
                b. the value of circulating and/or outstanding supply of the FRVA;
                c. the value of the Reserve Assets maintained by the VASP;
                d. the number and value of transactions in the FRVA;
                e.
                             		 whether the VASP and/or its affiliates carry out any other VA Activity[ies] and/or financial services in the Emirate, or provide services similar to VA Activities and/or financial services in other jurisdictions;
                f. interconnectedness with licensed financial institutions and/or VASPs; and/or
                g.
                             		 the business, structural and operational complexity of the VASP in relation to the FRVA issued by it.
               
              3.
                             		 VARA may, in its sole and absolute discretion, impose any Rules on a Significant FRVA Issuer in addition to those contained in the Rulebooks, which may include, but not be limited to, additional Rules on—
               
                a. company structure and corporate governance;
                b. Paid-Up Capital, Net Liquid Assets, Insurance and/or Reserve Assets;
                c. audits, regulatory reporting and regulatory notifications; and/or
                d.
                             		 any other matter as VARA deems appropriate.
               

          • Part II – Additional Disclosures

            • A. Additional Whitepaper disclosures

              1.
                             		 In addition to all other disclosures required in Rule III.A of the VA Issuance Rulebook, VASPs Licensed to issue FRVAs must include the following in the Whitepaper—
               
                a. the type[s] and composition of Reference Currency[ies];
                b. whether the type[s] and composition of Reference Currency[ies] may change and, if so, the circumstances in which any such changes may take place and the consequential effect of such changes;
                c. a clear and detailed policy on the creation and redemption of FRVAs in circulation and the consequence of such creation or redemption on the increase and decrease of the Reserve Assets;
                d.
                             		 the type[s] and composition of Reserve Asset[s], and methodology for valuing such Reserve Assets;
                e. criteria for how Reserve Asset[s] are or will be identified;
                f. the custody arrangement of the Reserve Assets including, but not limited to, the custodian[s] involved and how the VASP Licensed to issue FRVAs ensures it has timely access to Reserve Assets to process redemption requests in compliance with Rule III.C of these FRVA Rules;
                g.
                             		 a detailed description of how Reserve Assets are maintained, with reference to the requirements in Rule III.B of these FRVA Rules;
                h.
                             		 a detailed description of how they will comply with Rules relating to the handling of redemption requests in Rule III.C of these FRVA Rules, and all relevant risks which may affect their compliance;
                i. the procedures and timeline for holders of FRVAs to redeem such FRVAs at par;
                j.
                             		 prominently state whether having a valid Client Agreement with the VASP Issuer is a condition for redemption of the FRVA directly from the VASP Issuer;
                k.
                             		 detailed assessments of risks relevant to the management, custody, investment and/or liquidation of the Reserve Assets, including, but not limited to, credit risk, market risk and liquidity risk, and policies and procedures to manage such risks for the purpose of processing redemption requests; and
                l.
                             		 any other relevant information as may be determined by VARA.
               

            • B. Additional ongoing disclosures

              1.
                             		 VASPs Licensed to issue FRVAs shall at least every month and in a clear, accurate and transparent manner disclose on their website the following information regarding whether an FRVA is one hundred percent [100%] backed by Reserve Assets—
               
                a. the number and value of FRVAs in circulation; and
                b.
                             		 the value and composition of the Reserve Assets,
               

                             		 as independently audited in accordance with Rule III.D.1 of these FRVA Rules.
               
              2.
                             		 Disclosures in accordance with Rule II.B.1 of these FRVA Rules shall be accompanied by a statement confirming whether the FRVA is, for the period covered and at the time of the disclosure, at least one hundred percent [100%] backed by Reserve Assets in accordance with independent audit requirements in Rule III.D.1 of these FRVA Rules.
              3.
                             		 VASPs Licensed to issue FRVAs shall as soon as possible and in a clear, accurate and transparent manner disclose on their website any event that has or is likely to have a significant effect, directly or indirectly, on the market value of the FRVAs.
               

          • Part III – Additional Compliance Obligations of FRVA Issuers

            • A. Maintenance of stable backing

              1.
                             		 VASPs Licensed to issue FRVAs shall ensure that—
               
                a.
                             		 any increase in the circulating supply of the FRVA is always matched by a corresponding increase in the Reserve Assets; and
                b.
                             		 any decrease in the circulating supply of the FRVA is always matched by a corresponding decrease in the Reserve Assets.
               
              2.
                             		 VASPs Licensed to issue FRVAs shall ensure that any increase or decrease in the Reserve Assets required under Rule III.A.1 of these FRVA Rules is responsibly managed to avoid any adverse market impact in relation to the Reserve Assets.
              3.
                             		 VASPs Licensed to issue FRVAs shall, regardless of whether any third party[ies] are involved in the creation or redemption of the FRVA, comply with Rule III.A.2 of these FRVA Rules at all times.
               

            • B. Reserve Assets

              1.
                             		 VASPs Licensed to issue FRVAs shall, at all times, hold and maintain sufficient Reserve Assets such that the FRVA is at least one hundred percent [100%] backed by Reserve Assets.
              2.
                             		 VASPs Licensed to issue FRVAs shall only hold Reserve Assets denominated in the Reference Currency[ies] in—
               
                a.
                             		 cash or cash equivalents [including, but not limited to, central bank reserve deposits, bank deposits and CBDCs]; or
                b.
                             		 highly liquid financial instruments with minimal market risk, credit risk and concentration risk, which are capable of being liquidated rapidly with minimal adverse market impact, including the following—
               
                  i.
                             		 debt securities with residual maturity of ninety [90] days or less, issued by—
               
                    1. governments or central banks of the Reference Currency; or
                    2.
                             		 government agencies [local or international];
               
                  ii.
                             		 repurchase agreements with a maturity of seven [7] days or less which are backed by [i] above; and
                  iii.
                             		 short-term government money market funds.
               
              3.
                             		 VASPs Licensed to issue FRVAs shall, at all times, manage Reserve Assets effectively and prudently, at least by—
               
                a.
                             		 maintaining Reserve Assets only with financial services firms [as agreed with VARA during the licensing process]—
               
                  i. appropriately and validly authorised to hold the specific type of Reserve Assets; and
                  ii.
                             		 segregated from their own funds;
               
                b. ensuring newly added Reserve Assets are held in accordance with their custody arrangements;
                c. putting in place policies and procedures to ensure Reserve Assets can be promptly accessed and converted into the Reference Currency[ies] at all times, for the purpose of processing and completing any redemption requests in accordance with Rule III.C of these FRVA Rules; and
                d.
                             		 conducting regular risk assessments to evaluate the appropriateness of the composition of Reserve Assets [including, but not limited to, whether there is sufficient diversification in the types of Reserve Assets held] in ensuring compliance with Rule III.B.1 of these FRVA Rules.
               
              4.
                             		 VASPs Licensed to issue FRVAs shall, to the furthest extent permitted by applicable laws, hold Reserve Assets of an FRVA in such a manner that—
               
                a.
                             		 such Reserve Assets are legally segregated and remote from their own assets [including, but not limited to, any assets held in relation to other FRVAs] and do not form a part of their estate;
                b.
                             		 they would not be prevented or hindered from processing any redemption requests in accordance with Rule III.C of these FRVA Rules, at all times [including, but not limited to, ensuring such Reserve Assets are not rehypothecated, or subject to any pledges, encumbrances, right of set-off or counterclaim];
                c.
                             		 will not otherwise be subject to any recourse by their creditors, the custodian of the Reserve Assets or any other third parties, in particular in the event that they become Insolvent; and
                d.
                             		 VARA has the ability to direct the control, liquidation and distribution of all such Reserve Assets for the purposes of fulfilling its regulatory obligations.
               
              5.
                             		 VASPs Licensed to issue FRVAs shall work with VARA to structure agreements with financial services firms to ensure VARA has priority access to Reserve Assets, to the furthest extent permitted by applicable laws, for the purposes of VARA fulling its regulatory obligations.
              6.
                             		 Conflicts of interest. In addition to all requirements relating to the avoidance and management of conflicts of interest in the Company Rulebook, VASPs Licensed to issue FRVAs shall take all appropriate steps, to the extent practicable, to prevent and, in any event identify, manage and publicly disclose conflicts of interest arising from the constitution and management of Reserve Assets.
              7. It is worth noting that Reserve Assets held with financial services firms, including but not limited to those regulated by the CBUAE, may be subject to prevailing reporting obligations incremental to those applicable under this Rulebook.

            • C. Redemptions

              1.
                             		 VASPs Licensed to issue FRVAs shall, at all times, ensure holders of the FRVA have the valid legally enforceable right to redeem the FRVA at par.
              2.
                             		 VASPs Licensed to issue FRVAs must ensure all requests made by holders, with valid Client Agreements with the VASP Issuer, to redeem the FRVA at par are, at all times, processed and completed—
               
                a. within one [1] Working Day of any such requests; or
                b.
                             		 if the trading and/or settlement of the Reserve Assets are subject to significant disruption events beyond the control of a VASP Licensed to issue FRVAs, within one [1] Working Day of the trading and/or settlement of Reserve Assets no longer being significantly impacted by such disruption events.
               
              3. VASPs Licensed to issue FRVAs shall process and complete redemption requests without charging any fees.
              4.
                             		 VASPs Licensed to issue FRVAs shall establish, maintain and implement clear and detailed policies and procedures to ensure compliance with this Rule III.C of these FRVA Rules.
               

            • D. Audits and reporting

              1.
                             		 In addition to all requirements relating to audits and reporting in the Compliance and Risk Management Rulebook, VASPs Licensed to issue FRVAs shall, on a monthly basis, commission an independent audit of the following information regarding whether an FRVA is one hundred percent [100%] backed by Reserve Assets—
               
                a. the number and value of FRVAs in circulation; and
                b.
                             		 the composition and value of Reserve Assets.
               
              2.
                             		 The Senior Management of a VASP Licensed to issue FRVAs shall, as soon as practicable upon its completion, submit to VARA an attestation as to the accuracy of each independent audit in accordance with Rule III.D.1 of these FRVA Rules.
               

            • E. Marketing

              1.
                             		 No Entity may, in the Marketing of any FRVA in the Emirate, include language suggesting that the value of an FRVA is maintained stable relative to its Reference Currency[ies], unless—
               
                a. it has a Licence to issue the FRVA and such Licence has not been revoked; and
                b.
                             		 the FRVA was issued and is maintained in accordance with these FRVA Rules.
               
              2.
                             		 VASPs Licensed to issue FRVAs shall, in all Marketing, include clear and unambiguous statements that—
               
                a.
                             		 the holders of the FRVA have the right to redeem the FRVA at par, and whether such right is directly enforceable against the VASP Issuer; and
                b.
                             		 such FRVAs are not covered by any investor protection or deposit guarantee schemes.
               

            • F. Capital requirements

              1.
                             		 VASPs Licensed to issue FRVAs shall always maintain its own capital equal to the total of—
               
                a. AED 600,000; and
                b.
                             		 two percent [2%] of the value of outstanding supply of the FRVA.
               

            • G. Prohibition on incentive benefits

              1.
                             		 VASPs Licensed to issue FRVAs shall not grant any interest, or otherwise make any payments or benefits [whether or not in the form of an FRVA] for the purpose of incentivising Entities to acquire, hold, or otherwise use an FRVA.
              2.
                             		 For the purposes of Rule III.G.1 of these FRVA Rules, the following shall be treated as benefits—
               
                a.
                             		 any remuneration, whether or not related to the length of time during which a holder of an FRVA holds such FRVA;
                b.
                             		 net compensation or discounts, with the purported effect equivalent or similar to that of interest accrued to a holder of the FRVA, directly from the VASP Licensed to issue the FRVA or from third parties; and
                c.
                             		 any other benefits [whether or not monetary in nature] which may incentivise Entities to acquire, hold, or otherwise use an FRVA, as may be determined by VARA in its sole and absolute discretion.
               

          • Schedule 1 – Definitions

            Term Definition
            “Category 1” has the meaning ascribed to it in the VA Issuance Rulebook.
            “CBDC” has the meaning ascribed to it in the Regulations.
            “CBUAE” means the Central Bank of the United Arab Emirates.
            “Client Agreement” has the meaning ascribed to it in the Market Conduct Rulebook.
            “Client Money” has the meaning ascribed to it in the Compliance and Risk Management Rulebook.
            “Client VAs” has the meaning ascribed to it in the Compliance and Risk Management Rulebook.
            “Company Rulebook” means the Company Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
            “Compliance and Management Rulebook” means the Compliance and Risk Management Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
            “Custody Services” has the meaning ascribed to it in the Regulations.
            “Directive” has the meaning ascribed to it in the Regulations.
            “Dubai VA Law” means Dubai Law No. [4] of 2022 Regulating Virtual Assets in the Emirate of Dubai, as may be amended from time to time.
            “Emirate” means all zones across the Emirate of Dubai, including Special Development Zones and Free Zones but excluding the Dubai International Financial Centre.
            “Entity” means any legal entity or individual.
            “Federal AML-CFT Laws” has the meaning ascribed to it in the Regulations. 
            “Fiat-Referenced Virtual Asset” or “FRVA” has the meaning ascribed to it in Rule I.A.1 of these FRVA Rules.
            “FRVA Rules” means these Fiat-Referenced Virtual Assets Issuance Rules issued by VARA pursuant to the Regulations, as may be amended from time to time.
            “Group” has the meaning ascribed to it in the Company Rulebook.
            “Insolvency Proceedings” has the meaning ascribed to it in the Regulations.
            “Insolvent” has the meaning ascribed to it in the Regulations.
            “Insurance” has the meaning ascribed to it in the Company Rulebook.
            “Market Conduct Rulebook” means the Market Conduct Rulebook issued by VARA pursuant to the Regulations, as may be amended from time to time.
            “Marketing” has the meaning ascribed to it in the Marketing Regulations.
            “Marketing Regulations” has the meaning ascribed to it in the VA Issuance Rulebook.
            “Net Liquid Assets” has the meaning ascribed to it in the Company Rulebook.
            “Paid-Up Capital” has the meaning ascribed to it in the Company Rulebook.
            “Reference Currency” has the meaning ascribed to it in Rule I.A.4 of these FRVA Rules.
            “Regulations” means the Virtual Assets and Related Activities Regulations 2023, as may be amended or supplemented by VARA from time to time.
            “Reserve Assets” has the meaning ascribed to it in Rule I.A.5 of these FRVA Rules.
            “Senior Management” has the meaning ascribed to it in the Company Rulebook.
            “Significant FRVA Issuer” means a VASP designated by VARA in accordance with Rule I.C.1 of these FRVA Rules.
            “Technology and Information Rulebook” means the Technology and Information Rulebook issued by VARA pursuant to the Regulations, as may be amended VARA from time to time.
            “VA Issuance Rulebook” means the Virtual Asset Issuance Rulebook issued by VARA pursuant to the Regulations, as may be amended or supplemented by VARA from time to time.
            “VARA” means the Dubai Virtual Assets Regulatory Authority.
            “Virtual Asset” or “VA” has the meaning ascribed to it in the Dubai VA Law.
            “Whitepaper” has the meaning ascribed to it in the VA Issuance Rulebook.
            “Working Day” means any day which is not a weekend or public holiday in the Emirate.