UAE Law and Practice Contributed by: Irina Heaver and Zainab Kamran, NeosLegal
extent they do not conflict with the new laws. There are no equivalent grandfathering provisions for firms that were operating without a licence, and unlicensed entities are not permitted to continue operating during any transitional period. 3.2 Set-Up Requirements Onshore UAE VARA Applicants for a VARA licence must be incorporated in Dubai. VARA operates a rulebook-based compli- ance framework under which all licensed entities must comply with four compulsory rulebooks, in addition to whichever activity-specific rulebooks correspond to their licensed services. Paid-up capital requirements range from AED100,000 to AED1.5 million, or 25% of fixed annual overheads, depending on the licensed activity, with reduced thresholds where client assets are held with a VARA- licensed custodian. Licensees must maintain net liquid assets of at least 1.2 times monthly operating expenses at all times, reserves equal to 100% of client liabilities held one-to-one in the corresponding virtual asset, and appropriate insurance, which may include professional indemnity, directors and officers liability, and commercial crime coverage. Key personnel appointments require VARA approval through a fit-and-proper process. Mandatory roles include a full-time Compliance Officer, Money Laun- dering Reporting Officer (MLRO), Chief Information Security Officer, Data Protection Officer, and two full-time Designated Responsible Individuals. Core documentation requirements include a regulatory business plan with five-year financial projections, an anti-money laundering and counter-financing of ter- rorism framework covering customer due diligence and enhanced due diligence procedures and suspi- cious activity reporting, a cybersecurity framework supported by penetration testing evidence, and wallet custody and key management protocols. CMA CMA licence applicants must be legal entities incor- porated on the UAE mainland outside Dubai, and must maintain a principal registered office from which effec- tive management and daily operational decisions are
conducted. Physical presence is required at the prin- cipal office and any branch, and additional branches within the UAE or in a financial free zone require the CMA’s prior approval. Minimum capital for a Category 2 licence is the higher of AED1 million or 25% of projected annual operating expenses, rising to 35% where client assets are held. Required personnel include a Chief Executive, Sen- ior Executive Officer, Finance Director, Compliance Officer, MLRO and Internal Auditor. The Chief Execu- tive, Compliance Officer and MLRO must be ordinarily resident in the UAE. Certain function combinations are restricted, and all personnel performing regulated roles are subject to fit-and-proper assessment by the CMA. Financial Free Zones Both the FSRA and the DFSA impose their own licensing requirements on entities seeking authorisa- tion to conduct virtual asset or crypto token activities in ADGM and the DIFC respectively, including sub- stance, capitalisation, personnel and governance con- ditions calibrated to the nature of the licensed activity. 3.3 Change of Control VASPs conducting regulated activities in the UAE are subject to change of control requirements imposed by their respective regulators. While the specific obliga- tions vary between authorities, they generally require prior approval or notification for any direct or indirect change in ownership, any significant management or governance change, and any corporate restructuring affecting control of the entity. 3.4 Passporting UAE virtual asset licences do not passport into other jurisdictions, and there are no formal mutual recogni- tion arrangements in place that would allow a UAE- licensed entity to conduct regulated virtual asset activ- ities in a foreign jurisdiction on the basis of its UAE authorisation alone. Firms wishing to operate across borders must comply with the licensing requirements of each relevant jurisdiction. Within the UAE, the CMA and VARA agreed a mutual recognition framework in August 2025 providing for the recognition of VASP licences issued by either
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