The Hands-On Approach of Dubai’s Virtual Asset Regulatory Authority (VARA)
Dubai’s Virtual Asset Regulatory Authority (VARA) is making significant strides in setting a global precedent for regulator-industry cooperation. According to the executives of VARA, their hands-on approach has played a crucial role in this achievement.
The Focus of VARA in Crafting Crypto-Related Regulation
VARA’s managing director and vice chair, Deepa Raja Carbon, emphasized that the regulator prioritizes harmonization and interoperability within the international regulatory landscape. She stated, “VARA never differentiates for the sake of distinction but by a steadfast commitment to aligning with global practices.”
“VARA has set a precedent by demonstrating how regulators and stakeholders worldwide can effectively collaborate,” said Raja Carbon.
Another key focus for VARA is the establishment of a comprehensive regulatory framework that aligns with global practices. Raja Carbon highlighted the challenges of creating guidelines for a novel industry like cryptocurrencies but assured that VARA has incorporated existing frameworks and engaged with global practices.
Additionally, VARA actively collaborates with other entities in Dubai, including the Department of Economy and Tourism and the Dubai Free Zones Council. Through this collaboration, VARA has developed a unified and fungible framework that supports the growth of the virtual asset industry.
The Role of Special Development Zones (SDZs) in VARA’s Regulatory Approach
VARA, although relatively new, has been rapidly evolving. It was established in March 2022 to oversee crypto-related regulation and contribute to the development of Dubai’s Web3 ecosystem. In February 2023, VARA published regulatory guidelines for Virtual Asset Service Providers (VASPs).
Vanessa Zuabi, associate director of ecosystem development at VARA, highlighted the regular engagement of VARA with virtual asset companies. This includes roundtable discussions, feedback sessions, and collaborative workshops.
“VARA’s established Special Development Zones (SDZs) have proven to be innovation incubators that connect virtual assets and traditional financial systems. These zones have played a pivotal role in shaping regulations,” said Raja Carbon.
SDZs act as microecosystems, reflecting the larger market and providing VARA with empirical data. They have enabled regulators to gain a deeper understanding of the complexities of the crypto market and have influenced the development of a pragmatic and inclusive regulatory framework.
Moreover, VARA’s approach extends beyond regulation. The SDZs have facilitated ongoing rule shaping and strategy refinement, striking a balance between fostering innovation and maintaining robust oversight. This ultimately creates a regulatory environment in which virtual assets can thrive responsibly and sustainably.
Raja Carbon stressed the importance of camaraderie within the SDZs, as it allows newcomers to quickly become part of the community and maximize their potential.
Lastly, VARA actively supports the development of Web3 sectors like the metaverse and decentralized finance (DeFi), further demonstrating their commitment to advancing the digital economy.
