Dubai's Virtual Assets Regulatory Authority (VARA) takes the first-of-its-kind regulatory position on issuance of specific categories of Virtual Assets backed by Real World Assets including but not limited to FIAT. 

 

This offers greater assurance for cross-border interoperability. The September 2023 edition of VARA’s Virtual Asset (VA) Issuance Rulebook, makes Dubai’s regime amongst the world's first to proactively establish prudential requirements for two specialist categories of tokens that maintain a stable value against their underlying asset class, a release said. 

 

In the context of the FIAT Referenced Virtual Assets (FRVAs) it is critically noteworthy that assets specifically designed to maintain a stable value in relation to the UAE Dirham are designated to be under the exclusive purview of UAE’s Central Bank – making this a global-first to offer much needed clarity on stablecoin issuances. 

 

VARA's FRVA rules

VARA's FRVA rules specifically cater for issuances against non-AED FIATs, and have garnered significant attention from global authorities seeking collaboration on regulating virtual assets with improved synchronisation and interoperability. 

 

The latest edition of this VA Issuance Rulebook represents a significant stride in establishing a secure VA ecosystem in Dubai backed by a robust regulatory framework for greater consumer protection thereby bolstering safe VA adoption with a secure bridge between TradFi and DeFi ecosystems. 

 

It ensures that VA issuers adhere to the highest standards of risk assurance, market stability, and transparency - especially with regards to issuance of tokens that are expected to provide a stable value against their underlying real world asset.

 

Market needs

VARA has maintained that its regime is designed for its regulations to be responsive to market needs and agile in ensuring that global market risk can be proactively mitigated. The updated rulebook encompasses a range of regulations, including licensing, approval, and registration requirements, with specific focus on whitepaper and public disclosures, issuer compliance obligations, supervision, examination, and enforcement. It specifically contemplates requirements for issuance of Asset Reference Tokens (ARTs) with a dedicated annex outlining regulations for FRVAs.

 

This rulebook specifically prioritises alignment with the UAE's rigorous efforts to combat Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) activities while simultaneously enhancing market stability and transparency. 

 

The latest edition further introduces two categories of VA Issuances, determining whether an issuer requires 1) Registration with VARA pre-approval or 2) Full-fledged Regulated VARA Licence prior to issuance.  

 

Responsible VA

VARA continues to work with peer domestic and global regulators in building towards a more progressive and responsible VA market that allows for traditional economy to be securely democratised. 

 

This specific update also highlights the strong regulatory collaboration within the UAE even as Dubai cements itself as an innovation hub, at the forefront of this rapidly evolving industry. 

 

The move towards regulatory synchronisation within the industry reflects the global trend towards interoperability, with VARA taking the lead in this essential effort.--TradeArabia News Service