VARA BROKER-DEALER SERVICES — END-TO-END LICENSING, EXECUTION & COMPLIANCE
Design and run a VARA-compliant crypto lending stack with airtight liquidity, over-collateralisation governance, and disclosures that stand up to inspections.
Advising order-book venues, conversion rails, and hybrid OTC–venue models on VARA-tight controls and filings.
WHAT THE VARA CRYPTO LENDING & BORROWING LICENCE COVERS
Under VARA, “Crypto Lending and Borrowing Services” means carrying out a contract under which VAs are transferred or lent by a Lender to a Borrower, with the Borrower committing to return the same VA on request during or at the end of the agreed period.
Note: The Lending & Borrowing Services Rulebook applies in addition to Company, CRM, T&I and Market Conduct rulebooks.
SERVICES YOU CAN OFFER UNDER THIS LICENCE
Secured crypto lending
(crypto→crypto / crypto↔fiat structures) with collateral governance and clear LTV / margin mechanics embedded in Client Agreements.
Client-facing yield/interest programmes
Only with explicit client consent for use of client cryptocurrencies and full interest/APY disclosures (denomination, fixed/variable, compounding, accrual cadence, tiering).
Borrowing lines
to support client trading strategies, with 24-hour withdrawal fulfilment where withdrawals are permitted (subject to external DLT limits).
COMPLIANCE GUARDRAILS THAT KEEP YOU OUT OF TROUBLE
Part I — Policies & Public Disclosures
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Policies (access/withdrawals in stress). |
You must maintain written policies that ensure clients can access and withdraw their VAs — including during extreme volatility — and review these at least yearly. |
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Public website disclosures (prominent). |
Conflicts + how managed; privacy/whistleblowing/complaints; client access/withdrawals stance; client-asset protection & permitted uses; counterparty-risk approach (e.g., over-collateralised only); how client VAs are used and client interests respected; risk statement (types, likelihood & severity of losses); liquidity-risk management; and other items VARA may require. (Plus “other disclosables” such as certain convictions, where legally permissible.) |
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Activity-specific interest/APY disclosures. |
Denomination; rate basis (fixed/variable) as APY; whether figures are estimates and how calculated; accrual frequency; simple vs compound and any tiered compounding caps. |
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Public disclosures on your website. |
Publish your pricing approach, routing practices (flag any source ≥20% of client orders), custody/clearing arrangements, client-asset protections, introducer/referral terms, and any other items VARA may require. |
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Quarterly transparency. |
At least every three months, publish a lending & borrowing asset/liability report (values held, lent/borrowed, pledged or posted as collateral, and how they are held), plus governance explanations (protocols, proprietary systems) and ensure the same disclosures appear on any third-party site hosting your product journey. |
Part II — Operating Rules
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Liquidity (always-on). |
Maintain sufficient VAs to provide services & satisfy client obligations; ensure sufficient collateral posted by borrowers; monitor and audit both regularly; notify VARA immediately if you may breach. |
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Withdrawals ≤ 24h. |
If your product permits withdrawals, complete client withdrawal requests within 24 hours of instruction (subject to external DLT limits) and make clients fully aware where withdrawals are not available. |
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Collateral governance. |
Use VAs only in line with your disclosed programme terms and Client Agreements; operate robust controls for how collateral is held and used. By default, client VAs you use are held “on behalf of the client,” unless the Client Agreement says otherwise. |
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Counterparty due diligence (ongoing). |
Collect & verify purpose, business nature, financial situation/liquidity, and any information a prudent lender would require; repeat regularly and keep evidence ≥ 8 years. |
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Monthly client statements + independent valuation. |
Send monthly statements showing total account value, all L/B transactions, interest accrued/paid, and collateral posted; keep independent valuation and documented valuation policies. |
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Record-keeping (8 years). |
Keep all L/B transaction records, Client Agreements, counterparty files, and client instructions for at least 8 years; provide immediately to VARA upon request. |
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Risk management & third-party audit. |
Before onboarding or transacting, assess client/transaction risk, collateral suitability & pledgeability (incl. legal enforceability); monitor market & liquidity risks; ensure independent third-party audits of risk & due diligence. |
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Client Agreements (mandatory content). |
Identify lent/borrowed/collateral VAs; LTVs; rights of VASP, client and any third party (incl. collateral rights); interest rules (calc/variability & notices); custody/return mechanics; withdrawal rights; risk statements (likelihood/severity); variation/termination/default; value-fluctuation terms; complaints; governing law; and explicit client consent to use client VAs in the programme. |
What CRYPTOVERSE Legal delivers
Licensing strategy & submissions
activity mapping, governance, prudential overlays; cumulative-rulebook matrix.
Programme documentation
Client Agreement suite (LTVs, recall/return, variable-rate mechanics, consent language), risk disclosures, and website copy for public disclosures and APY items.
Collateral & liquidity governance
Eligibility matrix, haircuts, margining logic, withdrawal runbooks, exception handling, and immediate-notification playbooks.
Counterparty-risk framework
DD templates, credit memos, approval thresholds, periodic refresh, and 8-year evidence packs.
Reporting & valuation
Monthly statements pack, valuation policy (inputs/fallbacks), reconciliations and error-correction SOPs.
OUR PROCESS (FAST & REGULATOR-READY)
Scoping call
model & activity mapping (order-book, conversion rails, margin).
Regulatory blueprint
Artefact list, Board/committee design, capital & prudential mapping.
Policy build-out
Market-abuse, withdrawals in stress, settlement/clearing, pricing methodology.
Tech & controls
Venue rules, surveillance, capacity & BCP/DR, erroneous-order threshold
Regulator interactionS
Notifications and submissions (surveillance, fee model, board reporting).
Go-live support
Public disclosures, periodic reviews, tabletop drills.
Why CRYPTOVERSE Legal
Narrow-cast L&B expertise
We translate the Rulebook into pragmatic, auditable controls.
Evidence-ready
Every control is rule-mapped and inspection-proof.
Speed with substance
Timelines compressed without cutting compliance corners.
Speak to a Crypto Lawyer
Book a Strategy CallFAQs
Yes—only per explicit client consent and clearly disclosed programme terms. Otherwise, client VAs used in L&B are treated as held on behalf of the client.
If withdrawals are allowed, complete within 24 hours, subject to external DLT limits; disclose when withdrawals are not available.
Monthly statements plus independent valuation with documented policies; keep all records ≥ 8 years.
Purpose of loan, nature of business, financial condition/liquidity, and any other data a prudent lender would require—kept current and retained ≥ 8 years.
Denomination, APY method, fixed/variable basis, accrual cadence, compounding/tiering, and whether figures are estimates (with methodology).