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United Arab Emirates – FinTech
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Cavewell 3.0
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Cavenwell 3.0 provides business structuring services and international business consultancy for blockchain and cryptocurrency clients. Based in Dubai, but providing a jurisdictional agnostic approach, the company combines specialist Web 3 industry knowledge with international corporate formation, administration and governance services. Cavenwell 3.0 is part of the Cavenwell Group, which specializes in digital business services.
The Virtual Assets Regulatory Authority (VARA) of Dubai is the specialized regulatory body for cryptocurrencies in Dubai. It oversees both regulated Virtual Asset Service Providers (VASPs)…
UAE Technology
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Background
The Virtual Assets Regulatory Authority (VARA) of Dubai is the specialized regulatory body for cryptocurrencies in Dubai. It oversees both regulated Virtual Asset Service Provider (VASP) licenses and unregulated licenses for proprietary cryptocurrency traders. VARA ensures that companies engaged in virtual asset services comply with rigorous regulatory standards to promote a safe and transparent digital asset market.
Dubai Cryptocurrency Trading License
Free zone license
Several free zones in Dubai, including the Dubai Multi Commodities Center (DMCC), Dubai World Trade Center (DWTC) and the International Free Zone Authority (IFZA), offer proprietary trading licenses for cryptocurrencies. These licenses allow companies to invest in and trade their own cryptocurrency portfolios. However, the scope of this license is specific and includes the following provisions:
- Scope of use: The license covers active trading strategies on centralized exchanges and decentralized financial platforms (DeFi), as well as venture capital strategies involving Simple Agreement for Future Tokens (SAFT) or Token Purchase Agreement.
- Volume threshold: Proprietary cryptocurrency traders with a 30-day trading volume exceeding $250 million must meet additional registration requirements with VARA.
- Restrictions: The license prohibits you from managing third-party funds, including those of friends and family, from providing over-the-counter (OTC) services, or from acting as a market maker. These activities require a full VARA VASP license.
VARA No Objection Certificate (NOC) Steps
To establish a cryptocurrency proprietary trading licensed entity in one of Dubai’s free zones, it is essential to obtain a No Objection Certificate (NOC) from VARA. The steps to secure this NOC are as follows:
- Initial Disclosure Questionnaire (IDQ): Submit a request for an NOC via VARA IDQ, which details your proposed business model, funding sources and levels, investment strategy, financial model and key personnel, including shareholders and directors. Cavenwell assists clients in determining their businesses’ eligibility for this license and ensuring that their IDQ submission meets VARA’s expectations.
- VARA evaluation: VARA reviews the IDQ and may request additional information to thoroughly evaluate the company’s activities. Once satisfied, VARA issues a NOC in principle and requires payment of the NOC fee.
- Finalization: After receiving the payment, VARA issues the NOC, allowing the company to complete its incorporation with the relevant free zone authority.
How can we help
As a Dubai-licensed business services provider with expertise in the cryptocurrency industry, Cavenwell has successfully assisted numerous clients in obtaining their VARA NOC. Our services include:
- Evaluation of activities: Evaluate whether your operations are suitable for licensed proprietary cryptocurrency trading.
- Preparation and presentation of the IDQ: Preparation and submission of IDQ to VARA and management of the entire NOC application process.
- Company setup: Finalization of the establishment of the company in the chosen free zone and organization of residence visas for the principals.
Conclusion
Navigating the regulatory landscape for cryptocurrency trading in Dubai requires a comprehensive understanding of the VARA requirements and licensing process. With Cavenwell’s expertise, clients can ensure compliance and successfully establish their own proprietary trading operations in Dubai’s dynamic cryptocurrency market.
The content of this article is intended to provide a general guide to the topic. Specialist advice should be sought on your specific circumstances.