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The hands-on approach by Dubai’s Virtual Asset Regulatory Authority (VARA) has enabled it to set a global precedent for regulator-industry cooperation, its executives said.
All virtual asset service providers (VASPs) must obtain a license from VARA before offering their services in the UAE emirate.
VARA’s managing director and vice chair Deepa Raja Carbon discussed what the regulator focuses on while crafting crypto-related regulation.
First, it never differentiates for the “sake of distinction but by a steadfast commitment to harmonization and interoperability within the international regulatory landscape,” Raja Carbon told Cointelegraph.
The vice chair argued that VARA has set a precedent, showing how the world’s regulators and stakeholders can cooperate. She said,
“Our approach has been inherently consultative and collaborative. We engaged with a diverse array of stakeholders — from industry leaders to innovators, peer regulators to legislators, investors to the public.”
Another major focus is on outlining a comprehensive regulatory framework and rulebook aligned with global practices.
Per Raja Carbon, creating guidelines for a novel industry like cryptocurrencies is challenging. That said, VARA has explored existing frameworks and incorporated global practices.
Furthermore, the regulator is actively working with other entities in Dubai. These include the Department of Economy and Tourism and the Dubai Free Zones Council. Thanks to this, VARA has “crafted a unified and fungible framework.”
Hands-on Approach
VARA is not an old regulator but is moving very fast. It was created in March 2022 to oversee crypto-related regulation and help develop Dubai’s Web3 ecosystem.
Already in February 2023, it published regulatory guidelines for VASPs.
Vanessa Zuabi, associate director of ecosystem development, commented on the above-mentioned collaboration with and between market players. She told Cointelegraph that VARA “regularly engages” with virtual asset companies. This includes roundtable discussions, feedback sessions, and collaborative workshops.
Per Raja Carbon,
“This hands-on approach ensures that we get first-hand insights into the decentralized ecosystem’s intricacies, allowing us to craft regulations that are both robust and conducive to growth. It’s a symbiotic relationship where we learn from them, and they benefit from a supportive regulatory landscape.”
The regulator has established Special Development Zones (SDZs), and these, said the managing director, have served as innovation incubators. They also connected virtual assets and traditional financial systems in one place.
Furthermore, SDZs act as microecosystems. They reflect the larger market and enable VARA to gather empirical data.
As such, they’ve been key in shaping regulations. They helped regulators understand the complexities of the crypto market and “influenced the pragmatic and inclusive approach to building a regulatory framework.”
And it goes beyond just crafting regulations. These zones enabled regulators to continue shaping rules and refining strategies.
This approach supports innovation while “maintaining robust oversight, ultimately fostering a regulatory environment where virtual assets can flourish responsibly and sustainably,” Raja Carbon said.
She added that the “camaraderie” within SDZs is vital. It enables newcomers to swiftly become part of the community, “which collectively elevates their potential.”
Lastly, Raja Carbon noted that VARA supports the developments of Web3 sectors like metaverse and decentralized finance (DeFi).
