Dubai Sets June 19 Deadline for Digital Asset Firms to Comply with Updated Rules

Dubai’s Virtual Assets Regulatory Authority (VARA) has announced a compliance deadline for licensed digital asset companies to adhere to its updated activity-based Rulebooks. The regulator has set June 19 as the deadline for full compliance, following the release of Version 2.0 of the Rulebooks on May 19. This update aims to enhance market integrity and risk oversight by strengthening controls around margin trading and token distribution services, harmonizing compliance requirements across all licensed activities, and providing clearer definitions for collateral wallet arrangements.

VARA’s team will engage with licensed entities, expecting companies to comply with the updated rules after a 30-day transition period. The regulator has emphasized the importance of a 30-day transition period to allow virtual asset service providers (VASPs) to adapt to the new regulations.

VARA has also enhanced supervisory mechanisms across several regulated activities, including advisory, broker-dealer, custody, exchange, lending and borrowing, virtual asset (VA) management and investment, and VA transfer and settlement services. The updates aim to bring consistency across all activity-based rules, defining core operational terms such as “client assets,” “qualified custodians,” and “collateral requirements.” This alignment of risk management and disclosure obligations in areas like brokerage, custody, and exchange is intended to reduce ambiguity and help VASPs navigate cross-functional compliance more easily.

In the realm of margin trading, VARA has tightened leverage thresholds, mandated clearer collateralization standards, and enhanced monitoring obligations for VASPs offering this feature. Margin trading, which allows traders to control large positions with smaller amounts of capital, amplifies both gains and losses. By tightening leverage, VARA aims to limit the risks of widespread liquidations in a market downturn.

The updated Rulebooks also introduce a new section on token distribution, outlining licensing prerequisites, investor protections, and marketing restrictions. The spokesperson for VARA emphasized the importance of marketing restrictions, particularly for “retail-facing offers,” to align with global conduct expectations and close observed regulatory gaps.