CAPITAL REQUIREMENTS UNDER VARA — PAID-UP CAPITAL, NLA, RESERVES & INSURANCE

Everything a VASP needs to stay capital-fit under VARA: the exact thresholds by activity, the 1.2× NLA formula, 100% client-reserve coverage, and insurance lines—plus breach duties.

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We align boards, finance, and ops with Part VI controls: capital sizing, overhead allocation, treasury structures, daily reconciliations, and regulator reporting.

AT-A-GLANCE — VARA’S FINING POWER

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PUC

Paid-Up Capital

Paid-Up Capital (PUC) — by VA Activity, held in approved forms.

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NLA

Net Liquid Assets

Net Liquid Assets (NLA) — NLA ≥ 1.2 × monthly operating expenses; daily recon, monthly report.

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INS

Insurance

Insurance — PII, D&O, crime (hot-wallets), plus any VARA-stipulated lines, with regulated insurers.

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RAs

Reserve Assets

Reserve Assets — 100% of client liabilities, 1:1 in the same VA, daily recon and semi-annual audit.

PAID-UP CAPITAL — EXACT THRESHOLDS BY LICENSED ACTIVITY
ACTIVITY

Advisory Services

AED 100,000.

Broker-Dealer Services

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  • If using a VARA-licensed/approved Custody provider: higher of AED 400,000 or 15% of fixed annual overheads;
  • Otherwise: higher of AED 600,000 or 25% of fixed annual overheads.

Exchange Services
  • If using a VARA-licensed/approved Custody provider: higher of AED 800,000 or 15% of fixed annual overheads;
  • Otherwise: higher of AED 1,500,000 or 25% of fixed annual overheads.

Custody Services
  • higher of AED 600,000 or 25% of fixed annual overheads.

Lending & Borrowing Services

Higher of AED 500,000 or 25% of fixed annual overheads.

VA Management & Investment Services (VMIS)
  • If using a VARA-licensed/approved Custody provider: higher of AED 280,000 or 15% of fixed annual overheads;
  • Otherwise: higher of AED 500,000 or 25% of fixed annual overheads.

VA Transfer & Settlement Services (TSS)

Higher of AED 500,000 or 25% of fixed annual overheads.

Category 1 VA Issuance (FRVA/ARVA)

As specified in the VA Issuance Rulebook/Annexes

Multi-licence entities: how to add the numbers
  • Stack by activity: hold the PUC for each licensed activity. Use activity-level fixed annual overheads, ensuring totals are mutually exclusive & collectively exhaustive across the firm. Reconcile monthly.
  • Where to hold PUC: in a UAE trust account naming VARA as beneficiary, or a surety bond from a UAE-authorised surety naming VARA; or another VARA-specified method on licensing.

NET LIQUID ASSETS (NLA) — THE 1.2× RULE

Floor

Maintain NLA ≥ 1.2 × monthly operating expenses. Reconcile daily; report monthly to VARA.

What counts as current liabilities

Include the agreed portion of Operational Exposure to VAs in current liabilities for the NLA calculation.

What counts as NLA assets

Limited to cash & cash equivalents (per accounting standards) and USD/AED-referenced VAs approved by VARA.

INSURANCE — MANDATED LINES

Hold cover adequate to size/complexity/activities with a regulated insurer:

Professional Indemnity (PII); Directors & Officers (D&O)

Commercial Crime (or equivalent) covering hot-wallet VAs; and any other line VARA stipulates in your Licence conditions. Group policies are allowed only if the VASP is named as an insured and the applicable limit is stated. VARA may permit alternatives (subject to conditions) where requirements cannot be met for proven reasons.

What counts as current liabilities

Include the agreed portion of Operational Exposure to VAs in current liabilities for the NLA calculation.

What counts as NLA assets

Limited to cash & cash equivalents (per accounting standards) and USD/AED-referenced VAs approved by VARA.

RESERVE ASSETS — 100% CLIENT COVERAGE

Maintain Reserve Assets = 100% of liabilities to clients, held 1:1 in the same VA owed to clients. Daily reconciliation; independent audit ≥ every 6 months; submit the audit report in the subsequent quarterly report required by the CRM Rulebook.

BREACH & SUPERVISION — WHAT HAPPENS IF YOU DIP BELOW

If you fail to meet PUC, NLA, Insurance, or Reserve requirements:

Notify VARA immediately with (a) deficits, (b) root causes, (c) remedial actions, (d) timeline; then provide daily updates until VARA is satisfied you’re back in compliance. Maintain procedures to identify risks that could impact your prudentials. VARA may require additional PUC/NLA/Insurance/Reserves based on size, scope, geography, complexity, and nature of your activities.

What CRYPTOVERSE Legal delivers

Capital sizing & overhead mapping

Capital sizing & overhead mapping (multi-licence models; activity-level overhead splits; monthly PUC reconciliation packs).

Influencer & agency playbooks

Influencer & agency playbooks (contracts, approval workflows, remuneration disclosures).

Reserve-asset control

Reserve-asset control (1:1 same-asset reconciliations; semi-annual audit coordination; CRM quarterly linkage).

Insurance lines & policy wording

Insurance lines & policy wording (hot-wallet crime, PII, D&O) with regulated carriers; group-policy endorsements.

Breach playbooks & VARA notifications

Breach playbooks & VARA notifications (root-cause + rectification timelines; daily-update templates).

FAQs

Allocate fixed annual overheads by activity; sum PUC so totals are mutually exclusive & collectively exhaustive; reconcile monthly.

Cash/cash equivalents and USD/AED-referenced VAs approved by VARA—no other assets count.

Yes—same VA, 1:1 against client liabilities.

Yes, if the VASP is named and the policy states the VASP’s limit of cover; insurer must be regulated.

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