The Virtual Assets Regulatory Authority (VARA) has released an updated Custodial Services Rulebook, marking a pivotal shift in Dubai’s virtual asset ecosystem. The revised regulations now permit crypto staking via licensed custodians, provided compliance with the new framework is maintained.
This regulatory update eliminates the need for Virtual Asset Service Providers (VASPs) to obtain a separate VA Management and Investment Services License to offer staking—streamlining operations while reinforcing Dubai’s position as a crypto-friendly hub.
Crypto Staking via Custodial Services
VARA, the governing body for crypto services in Dubai (excluding DIFC), has amended its legislation to allow custodian-licensed VASPs to provide staking services under the same legal entity. Key highlights:
- No Separate License Required: Staking can now be offered without additional VA management permits, though VARA’s explicit approval remains mandatory.
- Additional Fees Apply: Providers must pay extra licensing/regulatory costs to activate staking functionalities.
- Alignment with UAE’s Fintech Goals: The move supports the nation’s strategy to foster blockchain innovation while ensuring consumer protection and market integrity.
How Crypto Staking Works:
Staking involves holding cryptocurrencies in a digital wallet to support Proof-of-Stake (PoS) blockchain networks. Participants earn rewards by validating transactions—a process that:
✅ Generates passive income.
✅ Strengthens network security.
✅ Encourages long-term asset holding.
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From Oil to Crypto: Dubai’s Economic Shift
Dubai’s economy, once oil-dependent, now derives just 5% of GDP from fossil fuels. This transition accelerated in 2022 with:
- The introduction of crypto market regulations.
- The creation of VARA to oversee virtual assets.
Global regulatory tensions (e.g., in the U.S. and EU) have driven crypto firms to relocate to UAE/Dubai, citing:
- Tax advantages.
- Regulatory transparency.
- Political stability.
Alex Chehade (Binance Dubai GM):
"The UAE is emerging as a top destination for crypto businesses seeking clear, favorable regulations."
Major Crypto Exchanges Choose Dubai
Recent milestones in Dubai’s crypto landscape:
- Binance: Secured a license last month.
- Komainu: Obtained a custodial services permit this week.
- Others: Bitget, ByBit, and OKX are also pursuing UAE licenses.
Sebastian Widmann (Komainu Strategy Head):
"Dubai’s ecosystem combines talent and innovation—we’re proud to contribute to its growth."
Market Potential:
Retail trading activity in the UAE surged to 49,000 active traders in 2023, reflecting strong local demand.
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FAQ
Q: What’s changed under VARA’s new rules?
A: Custodian-licensed VASPs can now offer staking without a separate management license.
Q: How does staking benefit investors?
A: It earns passive income via blockchain validation while supporting network security.
Q: Why are crypto firms moving to Dubai?
A: Favorable taxes, regulatory clarity, and a stable business environment.
Q: Which major exchanges operate in Dubai?
A: Binance, Komainu, Bitget, ByBit, and OKX are key players.
Q: Is staking safe with custodians?
A: Yes—licensed custodians must comply with VARA’s consumer protection standards.
Disclaimer: This content is for informational purposes only and does not constitute financial advice.