B. Reserve Assets

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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.