01Client
An established licensed crypto business looking to expand into the UAE. The company identified the UAE as an attractive market and wanted to add crypto-to-fiat exchange services to its offering.
02Objective
Obtain a VARA Broker-Dealer licence allowing the company to provide crypto-to-fiat exchange services to clients in Dubai.
03Challenge
A VARA licence application requires approximately 100 documents, including AML policies, cybersecurity policies, IT infrastructure documentation, marketing policies and other internal procedures. Each document must comply with the relevant VARA Rulebooks.
The second challenge is the operational setup. Before the licence is issued, the applicant needs to identify key partners, such as a bank capable of holding client funds, liquidity providers, blockchain screening providers and KYC providers, and obtain their preliminary approvals.
04Solution
At the first stage, the business model was defined together with the client. The company selected a principal model, under which transactions are executed against its own inventory, with a backup liquidity provider included in the operating setup.
The complete application package was prepared around that model in line with the VARA Rulebooks and the regulator’s review practice. Partners for the launch were selected among banks and service providers with whom working relationships had been established. This allowed the company to obtain their preliminary approvals before the licence was issued.
05Process
- Incorporated the company and completed the IDQ stage, with approval to proceed to the full application.
- Prepared the complete policy framework, including AML/CFT, KYC, cybersecurity and penetration testing, disaster recovery, IT infrastructure and marketing.
- Obtained preliminary bank approval for client money accounts with virtual IBANs.
- Obtained preliminary approvals from liquidity providers, blockchain screening providers and KYC providers.
- Completed several rounds of gap analysis.
- Prepared the client for regulatory interviews and the regulator’s review of its systems and client-facing website.
06Result
The company obtained its VARA Broker-Dealer licence. By the time of launch, it also had preliminary bank approval for client money accounts with virtual IBANs, as well as arrangements in place with liquidity providers, blockchain screening providers and KYC providers.
The process from the first engagement to the licence being issued took 10 months.
Key takeaway
The VARA licensing process is broadly the same for all applicants. In practice, the longest delays come from documents returned for revision and the time needed to secure banking and service-provider relationships. Experience from previous applications and established relationships with banks and providers make both stages more predictable.