SCA and VARA Enter into Cooperation Agreement

08 November 2024

Josleen Deeb

In September, the Securities and Commodities Authority (SCA) and Dubai's Virtual Assets Regulatory Authority (VARA) signed a cooperation agreement aimed at harmonizing their regulatory frameworks to strengthen the UAE's position as a hub for international virtual asset service providers (VASPs).

Dubai: Before the cooperation, VASPs operating in Dubai were required to obtain licenses from both VARA and the SCA. However, the new agreement creates a unified licensing system. Now, VASPs operating within or from Dubai only need to secure a license from VARA. Once licensed by VARA, the VASP will automatically be registered with the SCA, allowing them to provide virtual asset services throughout the UAE. However, VASPs wishing to operate outside Dubai must still obtain a direct license from the SCA.

The UAE’s financial free zones—the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM)—are exempt from the regulatory oversight of both the SCA and VARA for virtual assets, as they operate under their own independent regulatory frameworks.

The agreement between the SCA and VARA establishes clear regulatory responsibilities and streamlines the licensing process for VASPs. It also facilitates joint supervision, including coordinated monitoring and sanctioning, and ensures the exchange of information between the two authorities. This promotes transparency and consistency in regulatory practices.

In conclusion

This cooperation agreement is a major step forward for the UAE's virtual asset sector, reinforcing the country’s commitment to creating a secure, innovative, and attractive environment for investors. By aligning regulatory processes, the UAE is boosting its competitiveness in the global virtual assets market and setting an example for collaboration in the rapidly evolving digital economy.

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