Article 1: General Provisions and Regulatory Compliance
Virtual Asset Service Providers (VASPs) are authorized to conduct Virtual Asset Activities exclusively with investor classifications as prescribed and permitted by the Dubai Virtual Assets Regulatory Authority (VARA). All Virtual Asset Activities must be conducted in strict accordance with the regulatory parameters established under:
a. Primary Regulatory Framework: The Virtual Assets and Related Activities Regulations, Rules, and Directives, as may be amended, modified, or supplemented from time to time;
b. Licensing Conditions: The specific terms, conditions, and restrictions set forth in the VASP’s issued License and all applicable licensing conditions imposed thereunder; and
c. Supplementary Requirements: Additional conditions, restrictions, or requirements as may be imposed by VARA in its regulatory discretion from time to time.
Article 2: Retail Investor Definition
Retail Investor shall mean any Entity that does not qualify as an Institutional Investor pursuant to Article 4 hereof, nor meets the criteria for classification as a Qualified Investor under Article 3 hereof. Such classification shall be determined based on the Entity’s characteristics, qualifications, and financial standing at the time of engagement.
Article 3: Qualified Investor Criteria and Requirements
A Qualified Investor shall mean and include:
Section 3.1: Individual Qualified Investors
An individual Entity meeting the following dual requirements:
a. Knowledge and Competency Requirement: Possession of demonstrable relevant knowledge and expertise in Virtual Assets or complex structured financial products commensurate with the nature and complexity of the Virtual Asset Activities to be provided. The methodology for demonstrating such knowledge shall be:
- Established by the VASP prior to offering any products or services;
- Subject to verification by VARA upon request; and
- Documented and maintained in accordance with regulatory standards.
b. Financial Standing Requirement: Satisfaction of either of the following financial criteria:
Subsection 3.1.1: Net Assets Test
Maintenance of aggregate net assets of no less than AED 3,500,000 in equivalent value, comprising any combination of:
- Fiat currency holdings
- Financial instruments
- Virtual Assets
- Equity interests in tangible real estate assets
Documentation and Verification Requirements:
- Supported by documentary proof of funds (including but not limited to account statements)
- Assets must demonstrate liquidity maintenance over a reasonable period
- Subject to periodic verification and review
- Compliance monitoring on an ongoing basis
Exclusions from Net Assets Calculation: The following assets shall be specifically excluded from net assets computation:
- Primary residence property value, including any equity interest net of outstanding obligations secured by such residence;
- Rights and interests under qualifying insurance contracts;
- Pension benefits, retirement benefits, or other post-service benefits payable upon termination of service, death, or retirement, whether vested or contingent.
Virtual Assets Valuation Limitation: For net assets calculation purposes, Virtual Assets owned by the individual shall be valued at fifty percent (50%) of current market value.
Subsection 3.1.2: Income Test
Annual income of AED 700,000 or greater, as evidenced by appropriate documentation and verification.
Section 3.2: Legal Entity Qualified Investors
A legal entity duly incorporated and validly existing under the laws of its jurisdiction of incorporation, meeting the following requirements:
a. Net Assets Requirement: Maintenance of aggregate net assets of no less than AED 3,500,000 in equivalent value, comprising fiat currency, financial instruments, Virtual Assets, and/or tangible real estate equity interests, subject to:
- Documentary substantiation through account statements or equivalent proof of funds
- Demonstration of liquidity maintenance over reasonable periods
- Periodic verification and compliance monitoring
- Virtual Assets valuation at fifty percent (50%) of market value for calculation purposes
b. Director Knowledge Requirement: The entity’s directors must possess and demonstrate relevant knowledge and expertise in Virtual Assets appropriate to the nature of Virtual Asset Activities to be provided, with demonstration methodology established by the VASP and subject to VARA verification upon request.
Article 4: Institutional Investor Classification
An Institutional Investor shall mean and include any of the following Entities:
a. Regulated Financial Entities: Any Entity subject to regulation and supervision by a competent financial services regulatory authority in its jurisdiction of operation, including but not limited to:
- Central Bank of the United Arab Emirates (CBUAE)
- UAE Securities and Commodities Authority
- Dubai Financial Services Authority
- Financial Services Regulatory Authority of the Abu Dhabi Global Market
- Other equivalent regulatory bodies in recognized jurisdictions
b. Licensed Virtual Asset Service Providers: Any Entity holding a valid Virtual Asset Service Provider license issued by a competent regulatory authority;
c. Governmental Entities: Any government or governmental authority possessing relevant knowledge and expertise in Virtual Assets appropriate to the nature of Virtual Asset Activities to be provided, subject to:
- Knowledge demonstration methodology established by the VASP
- Verification capability upon VARA request
- Compliance with applicable sovereign immunity and regulatory protocols
d. Central Banking Institutions: Any institution performing central banking functions within its respective jurisdiction;
e. Multilateral Agencies: Any multilateral organization or agency possessing relevant Virtual Assets knowledge and expertise appropriate to the nature of Virtual Asset Activities to be provided, subject to knowledge demonstration and verification requirements consistent with those applicable to governmental entities.
Regulatory Note: This classification framework shall be interpreted and applied in accordance with VARA’s regulatory guidance and precedent. VASPs shall maintain comprehensive documentation of investor classification determinations and make such records available to VARA upon request. All classification assessments shall be conducted with appropriate due diligence and ongoing monitoring to ensure continued compliance with applicable criteria.