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  • 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.