VA Transfer and Settlement Services under VARA: what Dubai VASPs need to know

Dubai’s Virtual Assets Regulatory Authority (VARA) treats VA Transfer and Settlement Services as a serious regulated activity, not as a simple operational add-on. If a VASP is moving virtual assets on behalf of clients, or helping complete settlement between parties, VARA expects that activity to be supported by strong controls, clear disclosures, client authorisation procedures, and tested default management arrangements.

At the most basic level, the Rulebook requires more than just technical ability to move assets. It requires the VASP to prove that the transfer and settlement function is legally structured, operationally reliable, and protective of clients if anything goes wrong.

1. This is not a narrow operational permission

A VASP licensed for VA Transfer and Settlement Services must still comply with the wider VARA framework, including the Company, Compliance & Risk Management, Technology & Information, and Market Conduct Rulebooks. That means governance, compliance, cybersecurity, complaints handling, and client disclosures are all directly relevant to this activity.

2. Written policies are mandatory

VARA requires written internal procedures dealing with failed, defective, incomplete, or delayed transfers and settlements. The VASP must also maintain Default Rules and review these arrangements for effectiveness at least once a year.

In practice, this means a VASP should not be relying on informal operations knowledge or ad hoc case-by-case handling. It needs a formal manual covering tracing, refunds, remediation, escalation, and stress scenarios.

3. Public transparency matters

The Rulebook also expects visible public disclosures. These include conflicts of interest, privacy and complaints procedures, whistleblowing arrangements, referral arrangements, and whether client funds or assets are held through third parties.

For the market, this matters because transfer and settlement is often where clients feel operational risk most directly. They want to know who is actually involved in the chain and who is responsible if something breaks.

4. Cross-border models require more than VARA analysis

One of the most important aspects of the Rulebook is that it expressly requires compliance not only with VARA, but also with:

• CBUAE requirements where relevant,
• all laws in all relevant jurisdictions involved in the settlement chain, and
• AML/CFT and Travel Rule requirements.

That means a VASP cannot simply say, “we are VARA-licensed, so we are covered.” If the model touches remittances, fiat conversion, or cross-border transmission, the regulatory analysis must be wider.

5. Client assets cannot be used casually

The Rulebook is clear that a VASP cannot sell, transfer, lend, rehypothecate, pledge, convert, or otherwise use a client’s virtual assets for transfer/settlement purposes unless the client has explicitly consented.

This is especially important for firms designing wallet, treasury, or liquidity-routing models. Consent must be clear and properly scoped. It cannot be assumed.

6. Execution must match instructions

VARA requires transfer and settlement activities to be both:

• authorised by the client, and
• carried out according to the client’s instructions.

This sounds simple, but it has major operational consequences. A VASP needs instruction capture, validation checks, audit trails, and controls that show exactly what the client authorised and how the VASP acted.

7. The 24-hour restoration rule is a major obligation

If a transfer is unauthorised or not carried out in accordance with the client’s instructions, the VASP must restore or refund the client’s account within 24 hours of becoming aware of the issue, so far as possible to the position it would otherwise have been in.

This is one of the strongest customer-protection features in the Rulebook. It means a VASP needs an operational capability to investigate and remediate quickly, not just a legal disclaimer.

8. Sender-side VASPs carry a heavy burden

Where the client is the sender, the VASP is responsible for correct delivery to the recipient’s VASP or wallet. If the recipient does not receive the assets, the sender-side VASP must trace them immediately, identify the cause, and notify the client. The VASP only avoids liability if it can prove it is not responsible.

This is a high standard. It means sender-side firms need tracing and exception-management systems built into their operating model.

9. Receipts are not optional

VARA requires receipts at both stages of the lifecycle:

• on initiation, and
• on finalisation.

These receipts must include detailed information such as timestamps, transaction references, asset type/amount, fees, recipient details, and any conversion details. This means the client reporting stack must be tightly integrated with the transaction engine.

10. Conversion legs do not remove responsibility

If settlement involves exchange or conversion between virtual assets and/or fiat, the VASP must use a VARA-licensed Exchange Services VASP or another approved entity, disclose the arrangement and fees, and still remain directly responsible to the client for completion.

So outsourcing a conversion function does not outsource liability.

11. Default Rules are essential

The Rulebook requires legally enforceable Default Rules dealing with default scenarios, including close-out processes, liquidation proceeds, segregation, portability, access restrictions, stress-event treatment, and protection against contagion. These must be tested and reviewed at least annually.

This is a strong signal that VARA sees transfer and settlement services as infrastructure-like, with real systemic implications.

Final takeaway

The VARA approach to VA Transfer and Settlement Services is clear: this is a high-accountability function. A compliant VASP must be able to show:

• clear client consent architecture,
• accurate execution and tracing capability,
• rapid refund/restoration procedures,
• transparent disclosures and receipts,
• strong cross-border legal analysis,
• and robust Default Rules for stress and failure scenarios.

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Disclaimer: This article is for general information only and does not constitute legal advice. Specific facts, licence scope, and business model structure may materially affect the analysis.

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