Dubai's Virtual Asset Regulatory Authority (VARA) is taking steps to make it easier for smaller virtual asset companies to operate in the emirate. The regulator plans to reduce the financial burdens these firms face in an effort to create a more supportive environment for their operations.

Speaking at a regulatory panel discussion during the Paris Blockchain Week event on April 9, 2024, VARA CEO Matthew White acknowledged that the current legislation for virtual assets needs improvement. "It's not perfect. There's a number of things I'm looking at, at the moment to try and make the regime fit for everybody. One of those is figuring out a way to deal with the costs of compliance for smaller entities," White said.

To obtain a regulatory license in Dubai through VARA, crypto companies must first pay the initial approval and registration fees, which amount to approximately AED 1,035 ($282 USD) and AED 9,020 ($2,456 USD), respectively. Additionally, these firms must pay a Memorandum of Association (MOA) fee of AED 2,020 ($550 USD). In total, crypto firms seeking legal entry into the Dubai market will incur costs of around $6,420 USD to secure the license and become fully operational.

White described obtaining the license as a "costly exercise", noting that many individuals lack the necessary resources to acquire it. He proposed a potential solution to the regulatory burden, suggesting a market structure where more prominent participants could "host" smaller ones. "The cost of compliance is covered by the larger systemic players, allowing smaller entities to enter the ecosystem, be regulated, and not bear the same level of compliance costs," he explained.

The VARA official said that examining scenarios like the high cost of regulation is part of the regulator's journey toward fostering innovation while implementing necessary legislation. White emphasized that VARA is continuing to engage with the industry to try to understand it, stating, "It moves so quickly. We don't pretend to know everything as a regulator."

This move by VARA comes as Dubai positions itself as a global crypto hub, with a crypto-friendly regulatory environment that has already attracted numerous firms, including Crypto.com, Hex Trust, and Nomura's crypto arm Laser Digital. By reducing the financial burdens on smaller crypto companies, VARA aims to further solidify Dubai's status as a leading destination for virtual asset businesses.

See the list of Dubai Virtual Asset Service Providers

As the cryptocurrency industry continues to evolve rapidly, regulators like VARA face the challenge of balancing consumer protection with fostering innovation. White's comments suggest that VARA is committed to finding solutions that accommodate the diverse needs of the crypto community while maintaining robust oversight.