Dubai’s crypto regulator, the Virtual Assets Regulatory Authority (VARA), has introduced a formal rule-book for exchange-traded crypto derivatives, enhancing standards for licensed crypto firms in the emirate.
This framework, part of Version 2.1 of VARA’s Exchange Services Rulebook, outlines obligations for exchanges and brokers, including client suitability checks, leverage and margin controls, segregation of client assets, and improved disclosures about product risks and mechanics.
VARA also established intervention powers, allowing the regulator to address issues such as mis-selling, inadequate risk settings, or deteriorating market conditions. The regulations specifically apply to licensed virtual asset service providers offering exchange services, targeting exchange-traded derivatives instead of customized over-the-counter products.
While the update does not set specific leverage caps, it stresses conditional retail access. This approach aims to prevent boom-bust cycles seen in offshore markets during periods of high volatility.
Dubai is positioning itself as a hub for regulated crypto activity, with derivatives playing a key role in driving trading volume and attracting market makers to enhance liquidity. However, the new compliance framework may increase operational costs for exchanges, particularly concerning client monitoring and asset segregation.
